Letter IEDI n. 1138—Renewed troubles
After a phase of strong volatility at the turn of 2021 to 2022, in February this year the industry registered +0.7% against the previous month, after seasonal adjustment. It was certainly a favorable performance compared to the succession of declines that marked last year, but it is still insufficient. Industrial output remained at levels below the pre-pandemic mark.
In addition, from Feb'22 to date, the difficulties have worsened with the economic impacts of the war in Ukraine, postponing the normalization of production chains, raising costs and putting pressure on inflation. As a result, in Mar'22 there was a deterioration in the assessment of industrial entrepreneurs about the current conditions of their markets and, according to both the CNI and FGV indicators, opinions once more entered the region of pessimism.
Despite the last increase in output, the industry was 2.6% below the pre-pandemic production level, that is, in Feb'20. The latest figure was also positive for 61.5% of the total 26 industrial branches monitored by the IBGE but, even so, 69% of them followed below the pre-pandemic mark. That is, isolated cases are not what is holding back the progress of industrial activity.
Compared to a year ago, there is even less doubt about the recent regression. Growing is still hard. There have already been seven consecutive months of decline, that is, since the favorable statistical effect derived from low bases of comparison was exhausted. The drop in Feb'22 versus Feb'21 was of 4.3%, caused by losses in production of all industrial macro-sectors. In the first two months of the year, the result was -5.8%.
Durable consumer goods continued to fall at an accelerated pace: -17.6% in Feb'22 and -21.6% in Jan–Feb'22 in relation to the same period last year. For seven months, the sector has presented double-digit falls in this comparison. Virtually all groups of durable consumer goods had significant losses in Jan–Feb'22: -24.2% in automobiles, -23.7% in household appliances and -39.6% in furniture, for example.
The capital goods macro-sector, on the other hand, seems to have ceased to be an exception and entered a phase of persistent contractions, accumulating -6.5% in the first two months of 2022. Two product groups pulled performance down: capital goods for transportation (-9.1%) and, especially, capital goods for the industry itself, which registered -14.9% in the period, after -9.5% in Q4'21, signaling fewer investments in the sector.
The production of semi-durable and non-durable consumer goods, which feels more clearly the effects of the population's purchasing power corrosion by inflation, fell 6.7% in Jan–Feb'22 and has already been in the red for eight months. The most intense drops are due to products whose consumption can be postponed more easily by families: footwear (-19.7% versus Jan–Feb'21), clothing (-20.9%) and textiles (-23.7%).
Intermediate goods, in turn, despite the news of lack of inputs in many production chains, also saw output fall, by 3.8%, in Jan–Feb'22. The main contributors were: intermediates of the automotive industry (-11%) and construction (-10%), packaging (-15.3%) and textile intermediates (-23.1%).