In the first quarter of 2024, physical manufacturing output grew +1.4% in relation to the same period of the previous year, after four consecutive quarters of decline. This was the best result since the depressed bases caused by the COVID-19 pandemic promoted significant positive variations in 2021.

Today's Letter IEDI analyzes this recent performance from the perspective of the technology intensity of the different manufacturing branches. The methodology disseminated by the OECD was followed, which disaggregates the manufacturing industry into four groups: high, medium-high, medium and medium-low technology intensity. Extractive activities are classified as medium-low technology.

In comparison with the situation a year ago, that is, taking the year-on-year variations, manufacturing production improved from -0.5% in Q4'23 to an increase of +1.4% in Q1'24.

As has been the case for some time, the medium-low technology industry was the only range to register a positive performance, but the improvement in the situation indicated above was due to the other groups, which, although still in the red, greatly reduced the intensity of their losses.

In other words, industrial growth was concentrated in the medium-low group, but the progress in relation to the result of the end of last year was widespread, reaching the branches of high, medium-high and medium technological intensity.

The medium-low category’s increase was of +3.9% in Jan–Mar'24 against Jan–Mar'23, driven by petroleum products and biofuels (+6.7%), food (+4.0%) and paper and cellulose (+4.0%). Still, this part of the industry lost traction compared to the last quarter of 2023 (+4.6%), not helping in the improvement of the sector as a whole.

On the other hand, the branches of greater technological intensity, despite comprising those that did worse, reduced their losses. High technology, which had fallen 17.3% in Q4'23, registered -6.3% in Q1'24. The medium-high range, in turn, went from -6.6% to -1.0%, respectively.

At the origin of this movement, in the case of the high technology industry, was the branch of electronics, which reversed a fall of 16.4% into growth of +3.3%, driven by office and computer supplies and radio, TV and communication equipment.

In the case of the medium-high category, the improvement came mainly from the automotive industry (-11.3% in Q4'23 and +0.5% in Q1'24), but also received help from the branch of electrical machinery and appliances (-7.2% and +4.5%, respectively). Machinery and equipment reduced the pace of their fall.

The medium technology intensity industry, in turn, was very close to stability, registering -0.2% in Jan–Mar'24, after nine consecutive quarters of contraction. This group stands out less for the severity of quarterly declines and more for the long sequence of negative figures.

Among its branches, rubber and plastic grew the most in Q1'24, varying +3.3% compared to Q1'23, but their stabilization was due more to the change of sign of the following branches: metallurgy, which went from -3.8% in Q4'23 to +0.1% in Q1'24, and non-metallic minerals, which reversed a 1.9% drop into a 0.9% expansion.

The full text is available in Portuguese.