Industry: production in Brazil drops 0.6% in April, says IBGE – 02/06/2023 – Market

Brazilian industry fell again in April and started the second quarter with more weakness than expected in the face of a challenging local economic environment.

Production recorded a 0.6% retraction in April compared to March, marking a sharp deceleration compared to the 1.0% increase in the previous month, when two months of losses were interrupted.

Compared to the same month of 2022, production decreased by 2.7%, according to data released this Friday (2) by the IBGE (Brazilian Institute of Geography and Statistics).

Both results were weaker than expectations in a Reuters poll, for declines of 0.2% month-on-month and 1.1% year-on-year.

“In April, we observed a greater spread of declines in industrial production, reaching 16 of the 25 industrial branches investigated. This greater spread of negative results had not been seen since October 2022”, highlighted the research manager, André Macedo.

Analysts estimate that the Brazilian industry should show a weak performance throughout 2023, skating in the face of challenges such as the prospect of reduced demand, high interest rates in Brazil with greater debt and the exhaustion of the post-pandemic recovery.

In the first quarter, the industrial sector retreated 0.1%, marking the second consecutive quarter in the red, according to the GDP data released on Thursday (1st).

In the month of April, the main negative influences came from food products (-3.2%), machines and equipment (-9.9%) and motor vehicles, trailers and bodies (-4.6%).

Only the sector of food products, which had the greatest negative impact on the month’s result, recorded the fourth consecutive month of fall in production, accumulating a loss of 7.3% in this period.

“In April there was a great negative influence on the part of sugar production. This was directly related to a greater volume of rain, especially in the second half of the month, in the sugarcane producing regions of the Center-South region of the country”, Macedo explained.

The fall in the manufacture of cars and trucks, items with greater weight in the activity, has to do, according to Macedo, with the effects of the high interest rate, which makes it more expensive and makes it difficult to grant credit.

In addition, he mentions that “the difficulty in obtaining electronic components for the sector remains and, as a result, there is a greater frequency of stoppages, reductions in working hours and collective vacations”.

Among the economic categories, the sectors of capital goods (-11.5%) and durable consumer goods (-6.9%) showed negative rates. Semi and non-durable consumer goods (1.1%) and intermediate goods (0.4%) increased in April.