IBGE’s Monthly Industrial Survey – Physical Production - Brazil shows that, from February to March, the seasonally adjusted indicator of industrial activity had negative change of -0.3%, after having increased 1.2% in the previous month. In relation to March 2005, the increase was 5.2%. The index accumulated in the last twelve months, 3.3%, interrupted the sequence of low results obtained last year. By the end of the first quarter of 2006, the Brazilian industrial production had expanded 4.6% in comparison with figures in the equivalent period of 2005. In comparison with the immediately previous quarter, the increase was 1.2%, confirming the recovery process started in the end of 2005.

The reduction of 0.3% from February to March affected 17 of the 23 activities which have seasonally adjusted series. The most significant falls occurred in the subsectors of: pharmaceutical products (-5.5%), automotive vehicles (-1.7%) and other transportation equipment (-8.2%). These four subsectors had grown in the previous month, by 24.5%, 3.3%, 4.7% and 3.5%, respectively.

On the other hand, the main negative contributions came from electronic material and communication equipment (4.8%), cellulose and paper (1.9%) and food products (0.6%).

In the analysis by category of use, intermediate goods had the best result (0.2%); it was the only segment with positive rates. The result for capital goods was -2.2% and consumer goods had the lowest rates between February and March: semi-durable and non-durable consumer goods (-3.3%) and durable consumer goods (-5.1%).

The quarterly moving average, which was on a growing trend in the beginning of the year, was stable in March, with change of -0.2% in relation to February. In the analysis by category of use, intermediate goods was the only one which remained constant (0.0%), whereas the others fell in March: capital goods, by 2.1%, durable consumer goods, by 1.2% and semi-durable and non durable consumer goods, by 0.7%.  

In relation to March 2005, the industrial production increased by 5.2%, having presented positive rates in this comparison for six consecutive months. There was expansion of 21 among the 27 activities surveyed, and the major impacts, in order of importance, were: electronic material and communication equipment (24.0%), office machines and computer equipment (70%) and mining and quarrying industry (13.0%).  The main items of this activity were, respectively, mobile telephones and television sets; computers and monitors; and iron ore and petroleum. Among the categories of uses, the segment of durable consumer goods had the highest rate (11.4%). The production of capital goods grew by 10.1% in comparison with March 2005, followed by the figures for semi-durable and non-durable consumer goods (6.1%). Intermediate goods (3.1%) had the only rate below the overall average.

In an analysis by quarter, there was acceleration of growth of the industrial activity from the last quarter of 2005 (1.3%) to the first quarter of 2006 (4.6%), both figures versus the same period last year. The rhythm of increase of all categories of use increased, especially intermediate goods, having changed from -0.2% in the period October-December to 2.8% in the following quarter.  

The growth of 4.6% in the first quarter, in relation to the first quarter of 2005, referred to 19 of the 27 segments included in the survey. Mining and quarrying industry (13.2%) remainded as the biggest impact on the overall index, having as its highlight the production of iron ore and petroleum. Other relevant contributions came from office machines and computer equipment (67.4%) – reflecting a bigger production of computers – and of electronic material and communication equipment – due to the production of television sets and  mobile telephones.

It is also worth mentioning some activities with significant growth in the first quarter of 2006, compared to 2005: electric machines, appliances and equipment (18.4%), pharmaceutical products (12.2%), tobacco (20.4%) and beverages (10.6%). On the other hand, of the 8 segments which fell, the highlights are wood (-7.1%) and metallurgy (-1.6%); the latter was a result considerably influenced by the interruption of services in a big company of the sector.

In the analysis by category of use, the indicator accumulated in the first quarter shows accelerated increase of durable consumer goods (14.9%) and of capital goods  (9.2%).  In the first segment, besides the expansion of the production of cars (12.6%), there was also the positive behavior of mobile telephones (31.3%) and of electric machines, appliances and equipment (13.9%). In the sector of capital goods, the subsectors with rates above average were: capital goods for electricity (45.2%), capital goods for construction (21.4%), and capital goods for mixed use (17.3%). Although very far from the average, the figure for the production of machinery and equipment for agricultural use (0.4%) was also positive. The main negative contribution came from agricultural capital goods (-17.5%).

The production of semi-durable and non-durable consumer goods increased 4.0%, being slightly below the rate obtained by the overall industry (4.6%). The segment representing the major impact on the performance of the category was food products and beverages for domestic use (5.3%), which had as its highlight the production of beer, draft beer and soft drinks. In second place was other non-durable products (3.8%), especially because of the expansion of the production of magazines and medicines. It is also worth mentioning the increase of 7.5% of the subsector of fuels, to which gasoline was a relevant contributor. On the other hand, the only negative pressure came from the subsector of semi durable goods (-1.8%), with the items leather tennis shoes and dresses (except cotton ones), as the main highlights.

The segment of intermediate goods grew moderately, by 2.8% in the quarter; the subsectors of basic industrial inputs (16.7%) and fuels and lubricants (13.9%) had rates above average, due to the good performance of iron ore and petroleum. It is worth mentioning the expansion by 0.9% of the subsector of special industrial inputs, which includes siderurgy products and the production of cement. On the other hand, the main negative pressure came from food products and beverages for industry (-5.9%), as a consequence of the fall of production of sugarcane derivatives. The production of packages increased 1.0% in the quarter, and the sector of inputs for construction grew by 6.9% - the highest result of this segment relative to this indicator since the third quarter of 2004 (11.3%).

In summary, the evolution of indices in the first three months of 2006 points to a positive scenario. In the series without seasonal adjustment, the general industry has grown for the second consecutive quarter, accumulating an increase of 1.9% and is now operating at a level close to that of December 2005 (a historical record). Some typical exports industries, such as extraction industry and cellulose and paper, had, in the first three months, high levels of production.

The comparison with the same quarter of the previous year indicates a better the rhythm of increase. As the leaders in terms of this indicator, can be found: industries of durable consumer goods (14.9%) and of capital goods (9.2%). Non-durable and semi-durable consumer goods (4.0%) had an increment close to that of the average for the general industry. The segments of consumer goods have been benefited by the expansion of credit, by salary raises and by the fall of prices of food products; in the sector of capital goods, the highlights are equipment for electricity, transportation and construction, besides products related to computer science. Other favorable sign is the rate accumulated in the last 12 months, which inverted inverting the downwaard trend observed throughout 2005 - increase of 3.3% in March, in comparison with the 3.0% registered in February.

It is also worth mentioning that the quarterly moving average of March, practically stable in comparison with February (-0.2%), has interrupted a sequence of three months with growth, but, on the other hand, represents the continuation of a positive period, once in February this indicator had reached a record figure.