The second half of the year began with a decline in industrial production, after the resumption of activity following the most critical moment of the environmental disaster in Rio Grande do Sul. In aggregate, the industry registered -1.4% from Jun'24 to Jul'24, after adjusting for seasonal effects. 

This result, however, does not signal a reversal of the good trajectory that the sector's production and GDP have been presenting. This is because much of the fall is concentrated in a few branches (28% of the total) and in a minority of regional parks, generally reflecting factors that can be considered "extra-economic." 

Thus, the confidence of entrepreneurs remained resilient and in the region of optimism. In Jul'24, the FGV's industrial confidence indicator surpassed the 100-point mark for the first time in the year, driven by assessments of current business conditions, which reached the best level since Nov'21.

IBGE data show that food (-3.8%) and biofuels and petroleum products (-3.9%) were the branches that fell the most in Jul'24 in the seasonally adjusted series, under the influence of sugar and ethanol production, hampered by the severe drought. Scheduled shutdowns of production units also contributed to the decline in the extractive industry (-2.4%) and in petroleum products, as well as in paper and pulp.

Under the influence of these branches, two of the four industrial macro-sectors registered losses in Jul'24, notably semi- and non-durable consumer goods (-3.1%, seasonally adjusted). The other negative sign came from intermediate goods (-0.3%). Still, in none of these cases were the declines intense enough to offset the previous month's high.

Production of durable consumer goods, in turn, not only remained in the black, but also gained strength in Jul'24. Its 9.1% increase, after seasonal adjustment, was driven by the automobile industry, with a variation of +12%. 

In second place was the performance of capital goods, growing 2.5%, with positive contributions coming, for example, from machinery and equipment (+4.2%), electrical equipment and appliances (+5.1%) and other transport equipment (+9%).

Among the 15 industrial parks monitored, only 3 lost output from Jun'24 to Jul'24, among which São Paulo (-1.8%, with adjustment), under the negative influence of its sugar and alcohol industry. The other two cases with losses were Pará (-3.8%) and Bahia (-2.3%).

In any case, the challenges for the continuity of industrial growth still exist and cannot be minimized. 

There are major obstacles, such as a new phase of increase in the base interest rate (Selic), which may have started now in Sep'24 with the 0.25 p.p. rise, taking it to 10.75% per year. Markets whose dynamism depends on credit tend to be the most affected, such as capital goods and durable consumer goods, which, until then, had lead industrial expansion in 2024. 

And there are also localized obstacles, such as fires in inland areas of São Paulo that may worsen the evolution of alcohol and sugar production not only in Aug'24, but also in subsequent months, depending on the extent of the damage and the time required to recover sugarcane crops.

For now, the bumps in the short-term path, as in Jul'24, do not change the current picture, which is much better than the one observed in the first months of last year. This is illustrated by the Jan–Jul'24 figure, when the sector registered an increase of 3.2%, contrasting with the 0.5% decline of Jan–Jul'23.

In these first seven months of the year, the macro-sector of durable consumer goods is the fastest growing, with +8.1% compared to the same period of the previous year. There were positive signs in all branches, with household appliances (+24.2%) as the highlight. 

Capital goods appear soon after durable consumer goods. Its increase reached 6.8% compared to Jan–Jul '23 and was driven by mixed-use capital goods (+18.2%), transport (+12.6%) and those for the industry itself (+5.2%).

It is worth noting that production of capital goods for the industry itself is a sign of investment in the sector. This segment of the capital goods industry fell systematically between Q4'21 and Q1'24 in the year-on-year comparison, but grew again in Q2'24 (+8.5%), continuing to rise in Jul'24, registering +11.8%.

Intermediate goods (+2.3%) and semi-durable and non-durable consumer goods (+3.9%), despite the decline in the short term, as seen above, expanded in Jan–Jul'24, with the rise widely distributed among their segments. 

In the first case, the most significant results were due to vehicle intermediates (+5.8% versus Jan–Jul'23), pulp (+4.4%) and packaging (+7.6%). In the second case, the meat (+19.1%), beverages (+7.1%) and textiles (+6.2%) sectors stood out.

Versão em português deste texto.