Letter IEDI n. 1118—Industrial Weakening Led by High Tech
The industry lost production again in Q3'21, after a short period of growth driven by very low bases of comparison due to the effects of the COVID-19 pandemic. It fell 1.1% compared to Q3'20, resuming the sequence of negative rates that marked its performance between the final quarter of 2018 and the end of last year. In manufacturing alone, the decline was of 1.2%.
Today's Letter IEDI analyzes the industrial weakening registered in Jul–Sep'21, following the methodology used by the OECD, which aggregates the different branches of the manufacturing industry according to their technological intensity: high, medium-high, medium and medium-low technology. There are no manufacturing activities classified in the low technology range, a group that brings together services and agricultural sectors.
The figures calculated by the IEDI show a generalized loss of dynamism, but identify in the high and medium-low branches the main forces for the industry to be in the red in Q3'21. The high technology category declined the most.
It registered -7.5% compared to Jul–Sep/20, mainly driven by the decline in electronics (-12.9%), due to the production of radio, TV and communication equipment. As a result, in the year to September 2021, the high technology industry practically did not grow, recording only +0.3% in relation to the same period of the previous year.
The medium-low technology intensity range had a less unfavorable result: -5.6% against Q3'20. In addition, it saw less widespread falls. The subsectors of apparel and footwear as well as paper and cellulose continued to rise, while metals and, especially, food and beverages (-10.3%) dropped. In the latter case, with prices on the rise, there have already been three quarters in the red. Thus, the medium-low industry, like the high tech category, was nearly flat in Jan–Sep'21 (+0.7%).
The intermediate ranges of technological intensity, in turn, ensured that the industrial decline was not more severe in these first months of the second half of the year. However, despite still in the black, both the medium-high and the medium technological intensity categories went through a deceleration. They registered the lowest growth rate since the beginning of the recovery post COVID-19 shock.
The best performer was the medium technology industry, which increased production by 6.5% compared to Q3'20. At the origin of its dynamism are sectors associated with civil construction and exports, such as non-metallic minerals (+4.6%) and metallurgy (+17.5%). In Jan–Sep/21, this group presented an increase of 17.5%.
The medium-high technology industry, on the other hand, grew 4.8% in Q3'21 compared to the same period of the previous year, although some of its branches, such as chemical products and electrical machinery and appliances, have moved backward. The biggest positive impulse came from machines and equipment, which have been advancing at an accelerated pace since the end of last year; in Jul–Sep'21 they registered 21.3%. Vehicle production also continued to expand (+6%). In the year to September 2021, the medium-high range had the most expressive result: +21.2%.