Description

The respondents continue to perceive that the economy is undergoing a process of adjustment but observe that it has been less intense than expected. Going forward, they anticipate that this adjustment will continue for the remainder of the year, with no significant change in pace. This scenario denotes a somewhat less pessimistic tone on the part of companies, especially when compared to previous reports where fears of a deeper recession predominated. In any case, the interviewees do not expect a quick recovery of activity, since the smaller adjustment would also make it last longer.

About the companies' performance in the last quarter, the respondents report that their trajectories remain in the same deteriorating trajectory of previous months. In general, they state that their sales are still declining, so that the recent movement of their selling prices has tended to persist. This occurs in a scenario where costs are still high, with still depressed profit margins. 

The proportion of companies reporting dissatisfaction with their profit margins remains high, thus leading them to seek and implement different strategies to improve them, the main one being to search for less costly suppliers. Raising sales prices continues to appear as a relevant strategy to improve margins. However, its prevalence has decreased significantly compared to a year ago. 

Regarding the labor market, companies report slight staffing reductions during the last quarter. At the same time, they do not rule out bigger adjustments if sales deteriorate beyond expectations. The interviewees perceive greater slack in this market, which they attribute to the increase in the number of applicants per vacancy and the decrease in labor turnover. 

The proportion of firms reporting investment plans for the current year is down from previous years, and has been progressively decreasing in recent measurements. However, this contrasts with a higher percentage of companies reporting with certainty regarding the materialization of planned investments.

Asked about the future, interviewees expect that business performance will remain weak and there is uncertainty as to when it could rebound. Meanwhile, they expect most of the factors affecting the company's performance to remain unchanged in the short term, with sales prices and input availability expected to remain stable. They also foresee that sales levels will halt their deterioration process, although with costs that will not completely give way. This leads them to believe that profit margins will recover somewhat, but still remain narrow.

Towards 2024, the companies surveyed show greater optimism than in previous reports. They expect their performance to show some signs of recovery, which would also be expressed in the labor market ceasing its deteriorating trend.