National industry
Industrial production down by 0.9% in May, second monthly drop in a row
July 03, 2024 09h00 AM | Last Updated: July 17, 2024 02h07 AM
From April to May, industrial production in the country dropped by 0.9%. That was the second monthly drop in a row, with a cumulative decrease of 1.7%. As a result, the sector made up for the cumulative increase of 1.1% between February and March this year. The results of May caused industry to operate 1.4% below the pre-pandemic level, of February 2020, and 17.8% below the highest level in the series, of May 2011. These data come from the Monthly Survey of Industry, released today (3) by the IBGE.
In May, there was a predominance of negative results in general, with a marginal drop and in comparison with May of the previous year, an interruption in the upward trend for the quarterly moving average index and deceleration in the pace of expansion of the cumulative index in the year and in the previous 12 months. This month, the decline of industry increased from the previous month, and one of the factors that explains this result is the rainfall in Rio Grande do Sul, which had a greater local impact, but also influenced the negative result of the industry in the country," explains the surveys' manager, André Macedo.
Of the 25 activities investigated by the research, 16 declined in May. The two biggest negative influences on the overall industry result were motor vehicles, trailers and bodies (-11.7%) and food products (-4.0%). According to Macedo, both sectors suffered the impacts of the floods in Rio Grande do Sul.
"In the motor vehicle sector, there were direct and indirect impacts from the local industrial plants that stopped for a while. During this period, both vehicle manufacturers and auto parts and pieces factories stopped their production due to the rain and that also affected supplies for the production of final goods in the rest of the country. For example, the grant of collective vacations at an industrial plant in São Paulo was a way of mitigating the effects of the stoppages that occurred at parts-producing units in Rio Grande do Sul", recalls the researcher, who also highlights other factors that justify the double-digit decline in the activity, such as the stoppage due to a strike at another automobile manufacturer and the high basis for comparison. In April, the vehicle sector had increased by 13.8%.
In the case of food products, May was the second consecutive month of decline, with a cumulative loss of 4.7% over the period. "The retraction in sugar cane processing, due to less favorable weather conditions in the second half of May, caused a one-off decline in sugar production. Among the negative impacts that may be related to the rainfall in Rio Grande do Sul are poultry, beef and pork and soybean products, which play a very important part in the sector," says André Macedo. Food products account for about 15% of the industrial production in the country.
Other sectors that dropped and contributed to the month's negative result were chemicals (-2.5%), electrical machines, appliances and material (-6.3%), tobacco products (-28.2%), basic metals (-2.8%), machinery and equipment (-3.5%), printing and reproduction of recorded media (-15.0%) and miscellaneous products (-8.5%).
The main positive impacts on the overall industry result came from mining and quarrying industries (2.6%) and coke, petroleum products and biofuels (1.9%). "These two segments are very important and avoided a further decline in the industry's results. The growth in the mining and quarrying sector came after a drop in the previous month, which means it has the effect of a more negative basis for comparison. There was also an increase in the extraction of the two main products, oil and iron ore," says the manager.
With the positive result for coke, petroleum products and biofuels, there is an accumulated gain of 3.1% in the year in this activity. "This sector's advance in May eliminated part of the cumulative loss in the previous five months (-4.2%). Among the products in this segment, only alcohol had a negative result this month, also influenced by sugar cane processing," explains Macedo.
The other activities with positive results were computer equipment, electronic and optical products (3.7%), textiles (2.9%), pharmaceutical products (1.5%), rubber and plastic products (0.5%), other transportation equipment (0.2%), furniture and household appliances (0.2%) and pulp, paper and paper products (0.1%).
Also in comparison with April, there were drops in the four broad economic categories: durable consumer goods (-5.7%), capital goods (-2.7%), intermediate goods (-0.8%) and semi and non-durable consumer goods (-0.1%).
Industrial production drops 1.0% compared to the previous year
Against May last year, industry fell by 1.0% and the negative result affected 14 of the 25 subsectors surveyed. The main negative influences on the industrial result came from the sectors of coke, petroleum products and biofuels (-3.0%), motor vehicles, trailers and bodies (-6.0%), machinery and equipment (-8.9%), metallurgy (-5.6%) and chemicals (-3.6%).
Other drops that contributed to the industrial sector's negative result were in tobacco products (-22.9%), miscellaneous products (-11.5%) and leather, travel articles and footwear (-6.9%).
As for positive results, food products (1.5%), electrical machines, appliances and material (9.4%) and pulp, paper and paper products (5.5%) were the activities with the greatest influence on the overall index.
"In this comparison, the downward movement reverses an important growth recorded in the previous month, which had been the sharpest since June 2021. In May, most activities had a negative result and, in addition to the impact of the rain in Rio Grande do Sul, there was the calendar effect, since May had fewer working days [compared to May 2023] and the highest base for comparison (1.9%, also in May last year),", André Macedo analyzes.
With the result for May this year, industry had a cumulative rise of 2.5% in the first five months of the year. In the last 12 months, the sector is up 1.3%, which indicates a deceleration of growth when compared to April (1.5%).
More about 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. March 2023 marked the beginning of the release of the new time series of monthly industrial production indexes, after a redesign to update the sample of activities, products and informants; create a new weighting structure of the indexes based on the most recent industrial statistics; update the base year of reference of the survey; and incorporate new Federation Units into the release of regional results. These methodological changes are required and aim at including the economic transformations of the society. The survey results can also be consulted at the Sidra. database
The next release, related to June 2024, will be on August 2. The survey results can also be consulted at Sidra.
