There was retrogression (0.6%) in comparison with June 2005. The indicator accumulated in the first 6 months of the year was 2.6% and the index accumulated in the last 12 months (2.0%) showed deceleration in relation to the result of May (2.6%). In terms of the quarterly indicators, the production from April to June 2006 expanded both in comparison with the same period in 2005 (0.8%) and in comparison with the previous quarter (0.5%). In summary, June results show deceleration of the production rhythm, after the increase registered in May. The comparison for longer periods brings positive, but not so extreme, rates. This reduction affected the quarterly moving average, which, after expansion observed in April and in  May (having accumulated increase of 0.6%) was practically stable in June (0.1%).

The retrogression of the industrial production from May to June had a generalized aspect and reached most of the 23 areas which have seasonally adjusted series. The main negative impacts came from automotive vehicles (-4.6%), after increase of 7.0%, and of other chemical products (-4.8%). It is also worth mentioning the negative contributions from mining and quarrying industry (-3.4%), machinery and equipment (-2.1%), other transportation equipment (-7.2%) and electronic material and communication equipment (-3.3%). Among the growing sectors, pharmaceutical industry (5.5%) and petroleum refining and alcohol production (1.5%) were the most relevant positive influences.

All the categories of use fell in the comparison June/May, a fact which had not occurred since July 2005. The segment of intermediate goods, the most relevant in the industrial structure, had the worst result (-1.9%), after growth of 2.3% from April to May. The production of capital goods and of semi-durable and non-durable consumer goods fell by 1.0% each, after positive rates in May (2.0% and 0.4%, respectively). The sector of durable consumer goods (-1.1%) fell for the second consecutive month, accumulating fall of 1.7% in May and June.

The unfavorable behavior of the industrial activity in June affected the quarterly moving average which, after having positive rates for two consecutive months, was practically stable in the quarters ending in May and June (-0.1%). Among the categories of use, the results for intermediate goods (0.1%) and durable consumer goods (-0.1%) were also close to stability. The segments of semi-durable and non-durable consumer goods and of capital goods had slight increase of the moving average; both had rates of 0.3% between the two semesters.

In the comparison June 06/July 05, the industrial activity decreased by 0.6%, with negative rates in most of (16) of the 27 subsectors. It is worth mentioning, in this case, the difference between the number of business days (21 in 2006 versus 22 in 2005). The biggest negative impact over the average came from electronic material and communication equipment (-21.0%), caused by the retrogression of the production of mobile telephones (-32.1%). Also important was the fall of other chemical products (-7.5%) and automotive vehicles (-4.8%), with herbicides and tractors, injection pumps and automobiles, respectively, as the main highlights. Among the activities which had increased production, the major contributions came from office machines and computer equipment (52.7%), petroleum refining and alcohol production (7.9%) and food products (3.6%). In these groups, the most influential products were computers and monitors; gasoline and diesel and crystallized sugar, respectively.

Still in comparison with June 2005, the indices by category of use show that semi-durable and non-durable consumer goods (1.6%), even having lost rhythm in relation to May (5.0%), was the only one which kept a positive rate. The segment was influenced by the good performance of the subsector of fuels, which grew 16.4%, supported by the production of gasoline (17.8%) and alcohol (13.9%).

The fall of the production of capital goods (-2.0%) reflected the performance of capital goods from transportation (-10.3%), capital goods for industrial use (-4.2%) and capital goods for agricultural use (-30.4%). On the other hand, the subsectors of capital goods for electricity (23.4%), for mixed use (3.2%) and for construction (9.9%) remained with positive rates.

The result for intermediate goods (-0.5%) was affected by pieces and accessories for industrial transportation (-6.6%), complex industrial inputs (-1.2%), and basic fuels and lubricants (-4.7%). It is also important to mention the negative contribution from the subsector of packaging (-1.6%). On the other hand, the production of food products and beverages developed for industry (7.1%), basic industrial inputs (4.3%) and inputs to construction increased.

Finally, the sector of durable consumer goods interrupted a sequence of six months of growth and had a rate of -4.3%, the most negative one among the categories of use, with mobile telephones (-32.1%) as the highlight. The production of cars (1.8%) and household appliances (5.4%) increased.

In the second quarter of 2006, the increase of the industrial activity (0.8%) revealed the significant reduction of the rhythm of growth, once in the first quarter of the year, it had reached4.6%. Both comparisons were made versus the same period as in the previous year (see Table 2 below). This deceleration was observed in all the categories of use and in most (22) of the 27 subsectors surveyed. Among the categories, the sector of durable consumer goods which changed from 14.9% in the period January-March, to 1.3% in the following quarter and also capital goods (from 9.2% to 1.3%) had the major deceleration rates. The fall was slighter for semi-durable and non-durable consumer goods (from 4.1% to 1.5%) and intermediate goods (from 2.8% to 0.6%).

The reduction of the production rhythm was also evident in the comparison between on quarter and the immediately previous one (see Table 3, on the next page). The index for the second quarter of 2006 was 0.5%, below the figure of the first quarter (1.0%). By category of use, a similar behavior is observed for semi-durable and non-durable consumer goods (from 1.7% to 0.3%). The sectors of consumer goods and capital goods also had deceleration, with negative rates in the second quarter of the year (-1.4% and -0.3%, respectively). The exception was intermediate goods, which, with slight growth (0.8%), kept the same rhythm as in the first quarter.

The rate accumulated in the first semester of 2006, in comparison with the same period of 2005, the total growth of industry was 2.6%; the production of 21 subsectors increased. Office machines and computer equipment (58.4%) kept the leadership in terms of impact over the general index, with computers and monitors (58.4%) as the highlight. Other relevant positive contributions came from mining and quarrying industry (8.4%) and of the sectors of electric machinery, appliances and material 913.8%) and petroleum refining and alcohol production (5.2%). On the other hand, among the six falling activities, stood out chemical products (-2.7%), wood (-8.8%) and apparel (-7.9%).

In the comparison by semester, all the indexes by category of use were positive, with durable consumer goods (7.5%) as the highlight. It was the highest rate, followed by capital goods (5.0%). The production of semi-durable and non-durable consumer goods (2.7%) increased slightly above average (2.6%); the sector of intermediate goods (1.7%) was the only one with a rate below the overall average.

These results about the end of the first semester reflect, above all, the positive effects of credit offers, increase of average real income and of the falling inflation. The indexes which aggregate products according to the level of exports of each sector (see the graph below) confirm the predominance of factors associated to the domestic demand in the industrial performance in the first semester of 2006: the category with the highest export coefficient points to growth by 2.3% and the one with low export coefficient, to growth by 2.9%.