Letter IEDI n. 876–The Industry in July 2018: one more misstep
After the more direct effects of the truckers' strike, which caused a sharp production variation in May–June, the industrial sector was unable to take any further steps toward recovery in July. The second half of 2018 started in the red: -0.2% compared to June, with seasonal adjustment.
Thus, we went back to the sequence of negative or (very) close to zero figures that had been occurring since the beginning of 2018, which did little to help the industry to advance toward an actually better situation. In this sense, it should be noted that, after seven months, the level of production in July 2018 is 0.8% below that of December 2017, indicating the lack of dynamism that still persists.
In July, output declines were observed in 10 of the 26 industrial branches and 8 of the 15 areas monitored by the IBGE. In other words, although not intense, the fall of the beginning of this second half-year was not a product of isolated factors, as it reached a large number of sectors and regions.
The industrial core of the Southeast —the region with the highest income, highest consumption and highest industrial density in the country— recorded unfavorable results, especially in São Paulo, whose drop of -1.1% exceeded the national rate (-0.2 %). Rio de Janeiro and Minas, as well as other regional industrial parks, did not do well either.
Among the macro-sectors, the most intense loss was in capital goods (-6.2% compared to June/18, seasonally adjusted), whose performance may be reflecting the deterioration in expectations due to the political scenario, but also the pace of industry recovery itself since it has left much to be desired.
It is worth emphasizing that capital goods were one of the macro-sectors most affected by the recent crisis and, for this reason, still has a long way to go before full recovery. Its current production level remains more than 30% below the pre-crisis peak of the last quarter of 2013 and has not even managed to overcome the negative effects of the recent truck stoppage, as its July output was 4.2% below that of April 2018.
Other macro-sectors also in the red in July were consumer durables (-0.4%) and semi-durable and non-durable consumer goods (-0.5%), which had already registered the strongest declines in Q2/18, -5.6% and -3.0%, respectively, discounting the seasonal effects. Intermediate goods, on the other hand, were the exception: they grew +1% against June, but this happened after two consecutive quarters of output loss.