Brazilian industrial output fell more intensely in Nov'24, suggesting the end of the upward trend that it had been registering in relation to the previous year. Compared to Oct'24, the drop intensified and spread from both a sectoral and a regional point of view.

In the seasonally adjusted comparison, the result of the of the Brazilian industry as a whole was -0.6% in relation to the previous month, that is, three times more intense than the contraction seen in Oct'24 (-0.2%). The branches in the red jumped from 20% of the total in Oct'24 to 76% in Nov'24. 

In addition, all 4 macro-sectors lost production, especially those that produce consumer goods: -2.8% in the case of semi and non-durable goods and -2.1% in the case of durable consumer goods. Capital goods fell 1.7% and intermediate goods registered -0.7%.

From a regional perspective, the proportion of industrial parks in the red rose from 33% to 60% between Oct'24 and Nov'24 (in the seasonally adjusted series). If we consider those that remained flat (0%), we have a majority share of 73% of the local industries without growth in Nov'24.

With this most recent evolution, the figure for the two-month period Oct–Nov'24 (compared to the same period of the previous year) repeats that of Q3'24 (+3.9%), indicating that in the last quarter of the year the continued gain in robustness verified throughout 2024 may have been interrupted.

Among the macro-sectors, there was a more intense loss of dynamism in semi-durable and non-durable consumer goods, which, after registering 5.7% in Q2'24, decelerated to 2.7% in Q3'24 and to only 0.7% in Oct–Nov'24, always in relation to the same period of the previous year.

Much of this was due to adverse weather events, reaching, for example, dairy production (-3.2% versus Oct–Nov '23), biofuels (-8.5%) and sugar refining (-14.0%). Due to the weight of the sugar and alcohol industry, São Paulo is one of the industrial parks that lost pace.

São Paulo's industrial output fell 4.7% from Oct'24 to Nov'24 (seasonally adjusted), offsetting the entire expansion of the previous two months, and recorded -2.7% against Nov'23. As a result, its year-on-year dynamism went from 3.1% in Q3'24 to 1.7% in Oct–Nov'24.

The macro-sectors that acted in the opposite direction and ensured the continuation of national industrial growth were capital goods and durable consumer goods. In the first case, production increased by 15% in Oct–Nov'24 against 11.9% in Q3'24 and in the second case by 20.1% against 16.4%, respectively. That is, there is no sign of moderation in this part of the industry, which is also partially responsible for the resilience of the production of intermediate goods (+3.4% in Oct–Nov'24). This is the case, for example, of intermediate goods in the automotive industry, which rose 25.2% in Oct–Nov'24 against 18.3% in Q3'24.

For the coming months, the obstacle is the rise in interest rates in the country in the wake of the Selic increase by the Central Bank. This is because both capital goods and durable consumer goods are the most interest-sensitive part of the industry and tend to slow down.

The recent accommodation and uncertainties regarding public finances, which have led to speculative movements in financial markets impacting both the exchange rate and future interest rates, affected the expectations of industrial entrepreneurs in Dec'24.

The CNI indicator, as well as the Purchasing Managers’ Index – PMI for the Brazilian industry, retreated to the neutral zone, while the FGV indicator remained in the region of pessimism, driven mainly by the assessments in relation to the future. Deteriorations in the assessment of current business conditions are not a good indication for the turn of the year.

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