After three consecutive months of decline, Brazilian industry started 2025 on a stable note. Its physical production showed 0% variation, with seasonal adjustments, but this was due to a minority of its branches. Regionally, declines were slightly more widespread but remained in the minority.

The negative highlight in Jan’25 was the extractive sector, with production shrinking 2.4% compared to Dec’24, seasonally adjusted. The manufacturing industry, in turn, managed to expand, growing 1.0%, though not enough to offset the adverse phase of the last quarter of 2024. Its output in Jan’25 was still 1.2% below that of Sep’24.

Besides the extractive sector, seven other manufacturing branches did not grow in Jan’25, representing a minority share of 28% of the sectors tracked by the IBGE. From a regional perspective, 46% of industrial parks were in the red.

As expected, places where the extractive industry holds significant weight performed poorly at the start of the year: -3.9% in Pará and -2.6% in Espírito Santo, notably. Minas Gerais was an exception, though it grew little (+0.8%). Rio de Janeiro was also an outlier, but it’s worth noting that since the second half of 2024, months of decline have predominated in its seasonally adjusted series.

On the positive side, 72% of industrial sectors performed well in Jan’25, especially: leather and footwear (+9.3%), machinery and equipment (+6.9%), and furniture (+6.8%). Additionally, 54% of regional industrial parks saw gains, including São Paulo, which hosts the country’s largest and most diversified industrial base. São Paulo’s production grew 2.4%, seasonally adjusted, partially offsetting the 5.6% decline in Nov–Dec’24.

The overview is completed by the performance of the macro-sectors. In Jan’25, three expanded production, while only one was in the red. Capital goods (+4.5%) and durable consumer goods (+4.4%) not only led this movement but also managed to offset the losses of Nov–Dec’24, even though they did not progress any further.

Semi-durable and non-durable consumer goods recorded their first robust increase (+3.1%) since Jun’24 (+4.5%). The second half of 2024 was marked by declines and some months of near-stagnation, driven by rising prices for many products, especially food, as well as weather-related issues and other factors. As a result, in Jan’25, this sector was 5.1% below its Jun’24 level.

Intermediate goods, which form the core of the industrial system, declined by 1.4% in Jan’25, also seasonally adjusted, continuing the oscillating trajectory from the end of 2024.

Finally, regarding the near future, available data on business confidence in Feb’25 continue to point to a relatively pessimistic outlook, including for manufacturing as whole, which, as noted earlier, managed to increase production at the start of the year.

Much of this is tied to the trajectory of rising interest rates in the country, particularly impacting industries that produce goods reliant on credit markets for growth. Uncertainties in the external scenario, with growing disruption in global trade, and domestic uncertainties regarding fiscal policy management are additional aggravating factors.

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