The industrial production registered a positive change of 0.6% between June and July, growing once again after a drop of 0.3% in the previous month. With these results, this sector is still 0.8% below the pre-pandemic period (February 2020) and 17.3% below the record level of May 2011.  It dropped 0.5% compared with July 2021. Industry accumulates a drop of 2.0% in the year and of 3.0% in 12 months.  The data are from the Monthly Industrial Survey (PIM), released today (2) by the IBGE.

“Along the year of 2022, the industrial sector has been showing a high frequency of positive figures. They are five months of growth out of seven opportunities. These results show the influence of the governmental measures that help to explain the improvement recorded in the production pace. Yet, it should be highlighted that the industrial production did not recover the past losses,” explains André Macedo, manager of the survey.

The manager of the survey adds that these results show a predominance of activities on the negative side. Only 10 industrial sectors grew and 16 dropped. “It is a growth that is very concentrated in July,” complements the researcher.

Among the activities, the greatest positive influence for the month´s result over the previous month came from the sector of food products (4.3%). This is the third consecutive advance in that industrial activity, with a cumulative gain of 7.3%. “This growth was quite spread along the major items of that activity. From sugar, which registers an important rise in these two months, to beef, pork and poultry, as well as dairy products and soybean derivatives,” clarifies the researcher.

Other positive contributions came from coke, petroleum products and biofuels (2.0%) and mining and quarrying industries (2.1%). The former growing once again after declining 1.3% in the previous month and the latter accumulating an expansion of 5.0% in two consecutive months of positive rates.

On the other hand, machinery and equipment (-10.4%),  other chemicals (-9.0%), and motor vehicles, trailers and bodies (-5.7%) exerted the major negative impacts in July 2022. The first activity stepped up the drop recorded in the previous month (-3.8%); the second reported the third consecutive month of drop in the output, accumulating a loss of 17.3% in this period; and the last one offsetting part of the cumulative growth of 10.0% in the months of May and June 2022.

“The activity of machinery and equipment was directly affected by items inside industry, both series and custom manufacturing, which are associated with the investments within the industrial sector and the modernization and improvement of the industrial park,” highlights Macedo.

Two out of four major economic categories advanced against June. The highest positive change came from intermediate goods (2.2%), which eliminated the cumulative loss in the months of May and June 2022. Semi and non-durable consumer goods (1.6%) also grew after retreating 0.9% in the previous month.

In contrast, the sectors producing durable consumer goods (-7.8%) and capital goods (-3.7%) retreated this month, the former interrupting two consecutive months of growth, a period in which it accumulated and advance of 10.2%, and the latter stepping up the drop of 1.9% recorded in the previous month.

Macedo also highlight that the negative balance in industry is not only due to the restrictions in the supply of electronic components and inputs to manufacture the final good, but also due to the negative impacts of the domestic demand, noticed for a long time. “They are higher interests and inflation. It increases the costs of credit, reduces the available income of households and maintains the default rate at higher levels,” analyzes him.

The characteristics of the current labor market is another factor that negatively influences the industrial production. “Even with the reduction in the unemployment rates in the last months, a large contingent of workers out of the labor market and worse job conditions are still perceived,” adds Macedo.

Industry retreats 0.5% over July last year

Compared with the same period in 2021, the decline of the industrial sector was of 0.5%, the second consecutive negative result, with negative figures spread along 16 out of 26 sectors investigated by PIM. In terms of negative influence, the major activity was  other chemicals (-9.9%), pressed by the smaller manufacture of manure or fertilizers, fungicides for agricultural use, dye and varnish for construction, urea and high an low-intensity polyethylene. The activities of machinery and equipment (-9.3%), mining and quarrying (-3.8%), pharmaceuticals (-13.0%) and fabricated metal products (-9.2%) also impacted the index.

Other negative contributions came from the sectors of non-metallic mineral products (-4.8%), wood products (-13.3%), computer, electronic and optical products (-7.7%), basic metals (-2.7%), furniture (-14.8%), textiles (-10.0%), electrical machinery and apparatus (-4.7%) and maintenance, repair and installation of machinery and equipment (-10.1%).

Among the ten activities that expanded the production, the major influences were the segments of coke, petroleum products and biofuels (8.6%) and food products (4.3%). The first segment was leveraged, to a great extent, by the larger output of the items fuel oils, Diesel fuel, naphthas for petrochemical industries, motor gasoline and aviation kerosene. In the second one, the expansion in the index was caused by the contributions of products like crystallized sugar, cookies and crackers, frozen, fresh or cooled beef, tarts, bagasses, bran and other residues from soybean oil extraction and frozen pork.

“When the level of the industrial sector in 2022 is compared with that of 2021, a dropping industrial production is still noticed, with a widespread profile of negative rates among the industrial activities investigated,” analyzes him.

More on the survey

PIM Brazil has been producing short-term indicators since the 1970s regarding the behavior of the real product of 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 at the Sidra  database.