With a strong increase of 4.1% in June, Brazilian industry shows recovery

After falling 0.9% in April and May, Brazilian industry recovered and closed the month of June with a strong increase of 4.1%, according to the Monthly Industrial Survey (PIM), by the Brazilian Institute of Geography and Statistics (IBGE). The numbers show the most expressive result since July 2020 — when the country grew 9.1%.

The positive result came after two consecutive declines. And the advance is a sign of recovery with rates above those expected by market consensus — which pointed to growth close to 2.4%, according to economist César Bergo.

“This growth was very important, because it ended up reversing the negative expectations regarding this sector that was in debt during the year. It started very weak with industrial activities, but now it is taking a good direction, especially in the durable goods and immediate consumption sector,” says Bergo.

Compared to the same month in 2023, the industry grew by 3.2%. That year, the month of May registered a drop of 1.1% after a strong increase of 8.4% in April. In the first half of 2024, there was growth of 2.6%. And in the last 12 months, national industrial production has accumulated an increase of 1.5%.

Activities that influenced

Among the main positive influences are chemicals, petroleum derivatives and biofuels.

Petroleum products and biofuels: 4.0%

Chemicals: 6.5%

Food products: 2.7%

Extractive industries: 2.5%

Metallurgy: 5.0%

Motor vehicles, trailers and bodies: 3.1%

Beverages: 3.5%

Machinery and equipment: 2.4%

The main declines were present among nine activities, including:

Transport equipment: -5.5%

Leather goods, travel goods and footwear: -4.1%

Printing and reproduction of recordings: -9.1%

Manufacture of clothing and accessories: -2.7%

Increase compared to the pre-pandemic period

June’s results mean that industrial production surpassed pre-pandemic levels — 2.8% above February 2020. These are important figures for a country’s development, since, as FAAP-SP economics professor Sillas Sousa assesses, industry is a thermometer of a nation’s development.

“Wealth and economic prosperity, with very few exceptions, have to do with industry. It is in industry that we have very long-term investments, jobs are much better, income is much higher, intensive technology is much more widespread.”

According to economist César Bergo, the positive result will influence the country’s economic growth, which should reach 2%. “This means that the second half of the year will be helped by industrial growth, so that we can achieve this 2% growth target, together with the services sector — which is very positive.”

However, Professor Sillas Souza believes that this growth is still not enough to put Brazil back on the path to industrial growth. “For this to happen, there needs to be a consistent and well-thought-out industrial policy.”

By Brasil 61