For the Brazilian industry, 2024 has been a year of growth so far, and the third quarter reinforced this trend, bringing acceleration and greater diffusion of positive rates. Today's Letter IEDI analyzes the performance of industrial production by technology intensity groups, based on the methodology used by the OECD.

The sequence of results of our manufacturing industry from the end of 2023 to Q3'24 leaves no doubt about the good direction that the sector has taken: -0.5% in Q4'23; +1.4% in Q1'24; +3.9% in Q2'24 and +4.5% in Q3'24. In Jan–Sep'24, the 3.3% increase contrasts with the 1.3% drop recorded in the same period last year. This is one difference between 2023 and 2024, but there are others.

As we have mentioned in previous opportunities, all technology intensity groups point to expansion in 2024, which, in 2023, happened only in the medium-low technology industry. In addition, the branches of greater technology intensity have led the process.

Compared to the same period of the previous year, medium-high technology registered growth of 5.2% and the high-tech industry of 4.0%. Next is the medium-low group, with 2.9%, followed by medium technology, with 2.0%.

It is worth mentioning that, for the period January–September, it is the first time since 2018 that the high-tech industry managed to expand its production. From 2019 to 2023, it either was flat or shrunk. In 2024, its growth was especially due to the branches of aircraft and of radio, TV and communication equipment.

At the other end of the technology intensity spectrum— that is, the medium-low group, remembering that manufacturing does not have branches classified as low technology— the positive sign was already present in 2023 and, even so, 2024 brought a twice as intense rate of growth: +1.5% in Jan–Sep'23 and +2.9% in Jan–Sep'24, as mentioned above.

Much of this was due to the performance in the first half of the year, as Q3'24 brought some moderation, from +3.7% to +1.5%, respectively. But this was the only case of slowdown. All other groups gained momentum in the last quarter in question.

The one with the largest gain in pace was the medium technology industry, which turned the virtual stability of the 1st half of 2024 (+0.3% versus the 1st half 2023) into an expansion of 5.2% in Q3'24. This was due to metallurgy (-0.6% in Jan–Jun'24 and +4.6% in Jul–Sep'24), but also to the acceleration of rubber and plastic (+3.8% and +8.1%) and non-metallic minerals (+2.1% and +5.0%).

Then, the highlight goes back to high technology, whose dynamism increased from 1.9% in Jan–Jun'24 to 9.4% in Q3'24, that is, a rate almost five times greater. In this path, the stabilization of the branch of pharmaceuticals and medical and precision equipment, whose production fell in the first half of the year, and the acceleration of radio, TV and communication equipment (from +13.4% in Jan–Jun'24 to +28% in Jul–Sep'24) were important.

Despite this more intense progress, it was the medium-high technology group that registered the highest increase in Q3'24: 10.2% compared to an expansion of 2.4% in the first half of the year, due to the acceleration of the automotive industry (from +4.9% to +19.3%) and the return to positive ground of chemicals (from 0% to +5.9%) and machinery equipment (from -2.0% to +4.9%).

In the medium-low segment, food, beverages and tobacco (from +4.5% in Jan–Jun'24 to -0.3%) and biofuels and petroleum products (from +3.3% to +0.4%) influenced the performance in Q3'24. In both cases, the strong drought in recent months had important adverse impacts. Textiles, clothing, leather and footwear mitigated these developments, going from 1.3% in Jan–Jun'24 to 6.3% in Jul–Sep'24.

The full text is available in Portuguese