From May to June, the industrial production did not record any change (0.0%) after having grown 1.4% in the previous month. Despite the stability, three of the four major economic categories and most (14) of the 26 activities surveyed by the Monthly Survey of Industry (PIM) had decrease in production. Conversely, in the cumulative rate of the first semester, production increased 12.9%. The data were released today (Aug 3) by the IBGE.

“In May, production returned to positive rates after three months of decrease and the industry reached the pre-pandemic level, but this result could not offset the previous losses. With the null change in June, the sector stands at pre-crises level, but the result this month shows a predominance of negative rates among the industrial activities”, explains the survey manager, Mr. André Macedo.

He says that the lower dynamism of the sector is related to the effects of the Covid-19 pandemic on the production process and on the economy. “There is, in the industrial sector, a series of obstacles due the restrictions imposed, as reduction in the production pace, difficulty to access raw-materials and rise of production costs. From the point of view of demand, i. e., looking at the economy as a whole, there is also a high unemployment rate, which affects the wage bill. Those are not recent factors, but they help explain industrial production behavior”, he says.

The main negative impact of the month came from motor vehicles, trailers and bodies (-3.8%), a sector that went back to decreasing after having had positive results in April (1.6%) and May (0.3%). “This activity was very affected by the pandemic effects, as a number of car assemblers have stopped their activities. That explains not only the negative result, but also the most important loss that the activity has been indicating since the beginning of 2021”, says Mr. Macedo.

Another negative impact came from pulp, paper and paper products, whose production fell by 5.3% in June. It is the third consecutive retraction in the sector, which accumulates a loss of 8.4% in the period. “The main product in the activity is pulp, which is a raw-material. Specifically, in June, one producing unit stopped, accounting for the loss this industrial sector had this month”, he says.

The production in the sector of food products fell 1.3% from May to June. In May, the activity had a 2.9% gain. “Some important items with a very high volatility, as sugar, had a much bigger decrease in June. Thar could be related more directly with the dry weather, affecting more the crops and the sugarcane processing”, he claims.

On the other hand, the major positive impact on the index of June in comparison to May was the production of coke, petroleum products and biofuels (4.1%). In the previous month, the production of the activity had grown 2.7%. “There were two expansions in a row over April, when the activity had a decrease of 9.9%. The pace increase is much linked to petroleum derivatives, as diesel fuel, but it does not make up for the recent loss of the activity”, says Mr. Macedo, emphasizing that the sector is much susceptible to the consequences of the pandemic.

“This recent improvement can be also directly associated to the relaxation of the isolation measures, since more people are vaccinated now. So, there is an increase trend in mobility that could bring positive effects to this activity” he analyzes.

In the cumulative index between January and June, the industrial production of Brazil had expansion of 12.9%. This positive result reached the four economic categories and 21 of the 26 surveyed activities. The major influence of the activities came from motor vehicles, trailers and bodies, advancing 56.9% in the period. Other positive impacts of this indicator came from machinery and equipment (41.5%), basic metals (26.3%) and non-metallic mineral products (31.3%).

“This advance takes place over a very depreciated basis of comparison. In the cumulative index from January to June 2020, the loss reached 10.9%. The two-digit growth is associated with the fact that the industrial sector, due to the Covid-19 pandemic, showed important losses in that period”, says the manager.

Industry advances 12.0% in comparison with June 2020

The industrial sector advanced 12.0% compared to June 2020. The major influences on this result were recorded by motor vehicles, trailers and bodies (81.5%), basic metals (47.7%) and machinery and equipment (52.5%). The four major economic categories also had positive rates with a highlight to capital goods (54.8%) and durable consumer goods (31.0%). However, intermediate goods (10.8%) and semi- and non-durable consumer goods (1.6%), despite the positive change, stood below the industry’s average.

Mr. André Macedo emphasizes that the high rates are due to the low basis of comparison, since in June last year, several producing units of the country felt the effects of social isolation to stop the spread of the virus. “In 2020, the economy and the industrial sector were much achieved by the effects of the pandemic. The low basis of comparison makes the inter annual comparisons produce high-growth results, with widespread positive rates through the activities.

More on the survey

PIM Brazil has been producing short-term indicators since the 1970s regarding the behavior of the real product of the mining and quarrying and manufacturing industries. From May 2014, the release of a new series of monthly industrial production indices began, after a reformulation to: update the sample of activities, products and respondents; prepare a new weighting structure for the indices based on the most recent industrial statistics, in order to harmonize with the needs of the implementation the National Accounts Series - reference 2010;  and to adopt the new classification of activities and products used by other industry surveys from 2007 onwards, namely: the National Classification of Economic Activities - CNAE 2.0 and the List of Industrial Products - PRODLIST-Industry.

The survey results can also be consulted in the Sidra  database.