IBGE noted that industrial production fell 0.5% month-on-month in April

Rio de Janeiro and Sao Paulo – A Brazilian Industry The decline began in the second quarter, mainly due to iron ore mining and oilAccording to the monthly industrial survey data released on Wednesday (5th), industrial production in April fell 0.5% from March, giving up half of the growth accumulated in the previous two months. Brazilian Institute of Geography and Statistics (IBGE).

“Despite the negative results this month, growth rates still dominate when we look at economic activities and categories,” muses André Macedo, IBGE survey manager.

In terms of economic categories, there was a decline in the manufacturing of intermediate goods (-1.2%), but growth in semi-durable and non-durable consumer goods (0.1%), durable consumer goods (5.6%) and consumer capital goods (3.5%, indicating investment).

“These changes are probably related to the reduction in the base interest rate that started last year,” Claudia Moreno, an economist at C6 Bank, explained in a commentary.

From March to April, production expanded in 18 of the 25 surveyed industrial activities, with motor vehicle manufacturing growing by 13.2%. Taking into account the survey data and other economic indicators that have been released previously, resource management company XP Investimentos calculated that gross domestic product (GDP) will grow by 0.3% in the second quarter of this year, after confirming a growth of 0.8% in the first quarter. This estimate already takes into account the expected negative impact on the economy caused by the floods in Rio Grande do Sul.

“Looking forward, we believe that the industry (industrial) There will be an oscillating cycle with a slight increase at the end of the year. We believe that the sector will contribute only a negligible amount to GDP growth of 2.2% in 2024, Claudia Moreno expects.

Only seven industrial activities recorded a decrease in production in April compared to March, but three of them are important in the Brazilian industrial structure: extractives, food and petroleum derivatives. Together, these three account for almost 45% of the country’s industrial production. Extractives account for about 15% of the monthly industrial survey, while the food industry accounts for another 15%. The petroleum derivatives and biofuels sectors account for between 13% and 14% of the study.

In addition to the dominance of activity in the active sector, IBGE also highlights that the sector has maintained its growth trend in all other time comparisons.

“We can see positives in this negative result. Manufacturing remained in positive territory for the fifth consecutive month,” Macedo added.

Manufacturing production increased by 0.3% month-on-month in April, while mining production fell by 3.4% over the same period.

In the last five months of continuous growth, the manufacturing sector grew by 2.3% cumulatively. During the same period, general industry grew by 0.6%, that is, the loss of the mining industry was lower than the global average.

Macedo recalled that the extractive sector experienced a very significant expansion in 2023, but slowed down from 2024, due to a high comparison base and an environment of “low price intensity in international markets”. In April, both oil and iron ore production decreased.

Macedo confirmed that “many strategic decisions about increasing or decreasing production are related to price issues.”

However, the researchers believe that macroeconomic factors still help to “understand the slightly positive behavior across the industrial sector,” including an improvement in the labor market, rising employment and incomes, and falling interest rates, which have an impact on debt levels.

Matheus Pizzani, an economist at investment brokerage firm CM Capital, said that unfavorable international situation dragged down the performance of Brazilian industrial production in April: the decline in international demand for extractive products ultimately had a greater impact on the recovery of other industrial sectors on the supply side.

CM Capital’s current forecast is for industrial production to fall further in May by -0.1%, but this number could be even more negative due to the impact of flooding in Rio Grande do Sul.

“This state represents 6% of our total industry and has a very diverse industrial park,” Pizzani said.

The impact of the Rio Grande do Sul disaster will appear in May production data, but will not affect the information collected in the monthly industrial survey: physical production in April, both the national average and local results, said Andre Macedo, from IBGE. Brazil’s information on industrial production in April was collected during the floods in May.

“There are no problems with the information for April,” Macedo assured. “The data for Rio Grande do Sul will also be published in the Regional Industrial Survey, which contains percentages. (collect) “It’s close to or similar to what we typically disclose. We didn’t have any issues publishing the information for the April release.”

Researchers said the percentages of collection and estimation of results for Brazil and Rio Grande do Sul remain within historical norms. For the monthly survey of industrial production in April, 93% to 94% of collection was completed, with the remaining 6% estimated, the same as in previous months. For the monthly industrial survey – regional physical production, the collection rate was about 90% to 93%, with the rest estimated, Macedo said.

“In principle, we do not have any other issues that require action. Our absences this month are within the historical context of the study and are estimated in the way it was carried out. Despite the very serious conditions that the Rio Grande do Sul has passed and is passing, the collections are taking place within its historical pattern and this does not affect the dissemination of the results in Brazil and locally”, he said.

The PIM-PF was collected through an electronic questionnaire, which was filled out and sent online by the informants.

“It may not be feasible, but it is not,” he stressed.

On the 3rd, IBGE began collecting data for May and will continue throughout June.

He concluded: “The first symptom that estimates are larger than the historical average would likely be a very sharp revision, but I don’t think that’s happening. April is repeating its historical pattern.”

IBGE will release monthly industrial survey data on the 14th – physical production in the region for April. May industrial production information will be released in July, including industrial losses in Rio Grande do Sul due to rain. Third.