The Government Contradicts the Drop in EMAE: "It Is Capturing a Lot of Noise"

The June data from the Monthly Economic Activity Estimator (EMAE) raised alarms as it anticipates further declines in consumption and key industries. In response, the Deputy Minister of Economy, José Luis Daza, provided a technical explanation regarding the variations in this measurement. President Javier Milei supported the official's interpretation, echoing his analysis with the message: "Masterclass."

At the beginning of his explanation, Daza stated that "the volatility of the monthly data has more than doubled from 2024 to the current 2026" and that the monthly jumps of ±3% we saw in 2026 imply that, within a span of 30 days, the economy fell at an annual rate of 30%; the following month it grew at an annual rate of 43%, only to collapse again the next month. That does not happen in any real economy."

"The conclusion is simple: the monthly EMAE is capturing a lot of 'noise', a consequence of an economy that is changing rapidly due to the stabilization program and the reforms of President Milei," he continued, expressing on his social media that "the noise is symmetrical. It exaggerates the drops and also exaggerates the increases. Over time, the exaggerations cancel each other out."

He then asked: "Why did the thermometer break now? It is common in transitioning economies: when the system in which the economy operates changes, the statistics initially measure an economy that has already changed and agents that behave differently than in the past. This has happened to many countries that have gone through stabilization processes and reforms."

In contrast, he opined that "in the last 26 months, Argentina has broken with the trend of the previous 15 years and shows growth every month, without exception: 26 consecutive months. In the last 12 months, the trend-cycle accumulated a growth of approximately 2.5%.

To conclude, he pointed out that "in 2025 the series reached a historical maximum and 2026 will be the second consecutive year surpassing it. And this time, we reached that production maximum with a fiscal surplus, without emission, with an external surplus, and with the Central Bank buying record reserves.**

They estimate that in June it remained under pressure after a worse-than-expected May.

Contrary to market expectations, economic activity recorded its second consecutive monthly decline in May and again reflected a heterogeneous scenario among sectors. Furthermore, preliminary data for June indicates that the negative trend would continue, with a decline in mass consumption and a persistent drop in key sectors of the economy, such as construction or iron and steel production, among others.

Looking ahead to June, Max Capital detailed that 14 of the 22 high-frequency indicators they monitor (which include industrial activities, construction, consumption, and exports) showed negative monthly variations in the sixth month of the year, suggesting "an even weaker dynamic for economic activity." However, this monitor does not include indicators from the agricultural sector, which could provide a positive bias, they added.

For his part, economist Gabriel Caamaño from Outlier stated that "unfortunately, the primary data for June is worse than that of May," although he clarified that, since May surprised negatively, that effect "might compensate a bit." "It is confirmed that activity continues to run well below expectations. Expectations will continue to correct downward," the expert opined.

Market sources warned that "care must be taken with the monthly estimate," considering that a rebound was expected in May. "It may end up averaging," they noted.

After the official May data was published by INDEC, the consultancy Equilibra estimated that the economy would have remained stable in June compared to the previous month, while the Monthly Economic Activity Estimator (EMAE) excluding primary sectors (which excludes agriculture, mining, energy, and fishing) would fall by 0.5% monthly, accumulating three consecutive declines.

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