The first quarter of 2024 ended with some good news for the Brazilian industry. According to the most recent IBGE data, there was an increase in production of 0.9% in Mar'24, seasonally adjusted, as well as an upward revision of the results for the first two months of the year: reduction of the Jan'24 drop from -1.5% to -1.1% and change in sign for Feb'24, from -0.3% to +0.1%, always with seasonal adjustment.

In Q1'24, the industry as a whole continued the positive evolution recovered in the last quarter of 2023 and, in addition, gained speed. Its result went from 1.1% in Oct–Dec'23 to 1.9% in Jan–Mar'24, always in relation to the same period of the previous year. There was expansion in 3 of its 4 macro-sectors, in 64% of its branches and in 89% of the regional parks.

As the IEDI has pointed out on other occasions, there was progress in the situation of the industry in the beginning of the year vis-à-vis the past trajectory of the sector. The reduction of the base interest rate (Selic) and its impact on interests on loans to companies and families tends to create a promising context for the industry. However, uncertainties and obstacles have already arisen on the horizon. 

We can highlight the concerns of the monetary authority with a slower than expected disinflation process, which led to a reduction in the size of the Selic cut from 0.5 percentage point to 0.25 p.p. at the beginning of May–24. And even more immediate, the adverse shock derived from the climate disaster in Rio Grande do Sul on the state's industrial production, which had been gaining traction.

While the headwinds do not appear in the official IBGE data, it should be noted that the industrial performance in the first three months of 2024 was the best since Q2'21 (+22.7%), when bases of comparison depressed by the initial impact of the COVID-19 pandemic favored significant growth rates.

Production of capital goods, which was the only macro-sector in the red when it registered -1.6% in Jan–Mar'24, decreased much less than it had been falling. There was also another favorable development early this year: the segment of capital goods for the industry itself, which had been in the red since the end of 2021, giving an adverse signal about investment in the sector, was very close to stability: -0.2% compared to Jan–Mar'23.

Durable consumer goods was another macro-sector to record progress. After setbacks in the second half of 2023, it resumed the positive sign, registering +0.8% in Q1'24, driven by household appliances (+17%). The (small) reduction in the losses of the automobile sector also helped (-6.8% in Oct–Dec'23 and -5.9% in Jan–Mar'24).

On the other hand, intermediate goods stand out for maintaining their pace of growth at the turn of the year, with some acceleration: +2.4% in Q4'23 and +2.7% in Q1'24. Early in 2024, the growth of this macro-sector was helped by the segments of intermediates for motor vehicles (+1.8%), steel (+2.8%), cellulose (+3.5%) and inputs for civil construction, all coming from a phase of successive declines.

Semi-durable and non-durable consumer goods, in turn, continue to expand, although they were the only industrial macro-sector with a reduction in dynamism in the first quarter of the year (from +2.8% in Oct–Dec'23 to +1.6% in Jan–Mar'24), due to the influence of fuels and textiles and clothing. 

The food group has resisted the most, showing an acceleration in the production of meat, except pork and poultry, and beverages, in response to the improvement in employment and income in the country, but also exports. Our beef shipments are among the main highlights of Jan–Mar'24: +25.9% compared to Jan–Mar' 23, in value, according to the Ministry of Development and Trade.

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