In Aug'24, the Brazilian industry had a weak performance. Unlike the previous month, the sector avoided the negative ground, but still did not grow. In fact, after discounting seasonal effects, only a small fraction of its branches expanded, while 2/3 of the regional parks cut production.

From Jul'24 to Aug'24, the physical output of the general industry barely changed, registering a mere +0.1%, after adjusting for seasonal effects. It improved from the 1.4% drop of the previous month, but it was the weakest positive result of the year. And it was not worse only because the extractive branch expanded 1.1%. Manufacturing, in turn, fell for the second consecutive time (-0.3%).

The panorama of results of the various industrial branches also shows differences between Jul'24 and Aug'24. In Jul'24, despite the fall in total industry, most branches increased production, while in Aug'24 this was the exception. The pictured was reversed at the end of the month and the 72% share gave way to a fraction of only 28% of the branches in the black.

Regionally, the same situation is seen. In Jul'24, 73% of industrial parks expanded production, while in Aug'24 only 33% managed to avoid negative ground. Among those in decline, there is the industry of São Paulo: -1.0% in Aug'24 and -1.5% in Jul'24, in the seasonally adjusted series. 

Among the industrial macro-sectors, half contracted after two months of expansion, and the other half had positive rates, but very close to stability. In the first group are capital goods (-4.0%, with adjustment) and durable consumer goods (-1.3%) and in the second group, intermediate (+0.3%) and semi-durable and non-durable consumer goods (+0.4%).

The macro-sectors that did worse— those producing durable goods either for investment or for consumption —comprise the part of the industry most sensitive to credit and interest rate conditions. The recent increase in interest rates by the Central Bank warns of more modest days for industrial production, even though it may take a few months for the effects to be fully reflected on the level of economic activity.

Despite these unfavorable short-term signs, the IEDI observations in its latest analyzes continue to be valid: 2024 remains a year with a better evolution than 2023. And that seems to include Q3 as well. 

Even if the industry stagnated in Sep'24, the result of Q3'24 compared to Q3'23 (+5.1%) would continue the industry's path of acceleration. This is because the two-month period Jul–Aug'24, whose results are known, already guarantees a more sizeable increase.

The strengthening of industrial entrepreneurs' confidence also points in this direction. It should be noted that both the FGV and the CNI indicators are in the region of optimism and, in the latter case, there was an important progression between Aug'24 and Sep'24, reaching the best mark since Oct'22. The PMI Manufacturing indicator for Brazil also advanced from Aug'24 to Sep'24, suggesting an improvement in the sector's business situation.

In the two-month period Jul–Aug'24, two macro-sectors showed more clearly an acceleration. This was the case of intermediate goods, with a variation of 3.2% in Jul–Aug'24 versus Jul–Aug'23, almost three times more than in the previous quarter. At the origin of this are the automotive industry's (+15.8%) and civil construction's (+7.4%) intermediate goods, as well as steel (+6.7%) and agricultural pesticides (+20.1%).

The second case was durable consumer goods, whose pace of growth jumped from +7.8% in Q2'24 to +20.2% in Jul–Aug'24, always in comparison with the same period of the previous year. Automobile production is largely responsible for the acceleration, going from -1.4% to +18.1%, respectively, but the household appliances segment also grew strongly: +30.5% in the last two months in question.

Capital goods, in turn, seem to be maintaining their pace of expansion. Although Jul–Aug'24 (+10.9%) had a slightly lower variation than in Q2'24 (+12.0%), the order of magnitude of the results remains the same. There was an increase in the segments for transport (+22.6%) and mixed use (+21.6%) and resilience in the production of capital goods for the industry itself (+8.4%).

Semi-durable and non-durable consumer goods, on the other hand, show a deceleration in Jul–Aug'24: +2.9% compared to +5.7% in Q2'24. Dairy production (-1.1% in Jul–Aug'24) and pharmaceuticals (-1.0%) fell and fuel production approached stability (+0.9% against +6.6% in Q2'24). Footwear, textiles, clothing and beverages are among those with gains in strength.

Versão em português deste texto.