Letter IEDI n. 1170—A positive quarter for the industry
The third quarter of the year ended with industrial production once again in the red. From Aug'22 to Sep'22, it registered -0.7% after adjusting for seasonal effects. It was the same result of the previous month, but this time the losses were much more widespread.
From a sectoral point of view, while 35% of industrial branches had lost production in Aug'22, in Sep'22 this fraction jumped to 81%, reaching 21 of the 26 branches monitored by the IBGE. All manufacturing macro-sectors have also shown decline. From a regional point of view, 47% of industrial parks were negative in Aug'22 and 80% in Sep'22.
Although the country's employment situation has improved and the government has transferred resources to families in recent months—by way of, among other actions, the increase in the value of the Brazil Aid—there are factors that continue to play against a more robust industrial dynamism, such as the higher level of interest rates—which harms credit conditions, essential for the markets of durable goods—and the remaining bottlenecks in production chains.
In a recent survey, the CNI notes that, although lower than it once was, the share of industrial companies that rank the difficulties of access to or the high cost of inputs as one of their biggest problems still represents over 1/3 of the sector. In Q2'22, it accounted for 52.8% of the companies interviewed and, in Sep'22, 38.1% of them.
In relation to 2021, however, more modest bases of comparison helped in obtaining positive variations. Thus, after four consecutive quarters in the red, the industry's total output finally registered a positive quarter, varying +0.9% in Jul–Sep'22 compared to Jul–Sep'21; that is, a far-from-robust performance, due to virtual stagnation or low dynamism in most of its macro-sectors.
Only one of the four industrial macro-sectors was above the overall figure: +8.2% in durable consumer goods. It is worth remembering that this part of the industry contracted significantly between mid-2021 and early 2022, with double-digit declines throughout this period. Now in Q3'22, the increase was driven by vehicles (+27.1%) and other transport equipment (+10.2%).
Capital goods and intermediate goods varied in the same magnitude: +0.7% versus Jul–Sep'21. In the first case, capital goods for energy, construction and transport were the branches that did best. However, the production of capital goods for the industry itself is a source of concern, as it already accumulates five consecutive quarters of declines. In Q3'22 it fell 7.5%. It's a bad sign for industrial investment.
In intermediate goods, although inputs for civil construction, textiles and metallurgy fell, agricultural pesticides (+47.3%), cellulose (+21%) and, for the first time after a long period, intermediates of the automotive industry (+17.2%) did well and pulled the performance of the macro-sector as a whole.
Finally, semi-durable and non-durable consumer goods practically did not grow, registering a variation of only +0.2% in Q3'22, losing dynamism in relation to the previous quarter (+1.9%). The segments of beverages, clothing, fuel and textiles were the main responsible for the deterioration.
With the easing of the industrial situation in Q3'22, the sector's performance in the year as a whole is becoming less negative. Only durable consumer goods did worse than the industry's aggregate: -5.3% versus -1.1%, respectively. Intermediate goods (-1.0%), in turn, fell in line with the total, while capital goods (-0.5%) and semi-durable and non-durable consumer goods (-0.7%) approached stability.