After 4 months high, Brazilian factories’ production falls in September

After a four-month upward trend, the production of Brazilian factories fell in September.

This is according to the industrial survey released Tuesday, Oct. 18, by the National Confederation of Industry (CNI).

On a scale where values below 50 points mean retreat, the index stood at 49 points last month.

According to the company, the result was the worst of the September months since 2019.

In August, the production indicator had stood at 54.5 points, indicating growth this month.

Installed capacity utilization (UCI) in the sector also fell from 73% in August to 72% in September, marking the first decline in industrial park utilization this year.

The level is back to the same level as in September 2021 and 2020.

The inventory index remained virtually unchanged last month at 50.1 points, close to the 50-point level.

The index, which measures actual inventories relative to factories’ planned inventories, also declined, from 51.4 points to 50.9 points, indicating a smaller surplus of products.

As economic activity slowed, job creation in the sector also declined in September.

The indicator fell from 52.2 to 51.4 points, still in the range of new job creation but with less momentum than in August.

The CNI also highlights that commodity prices weakened sharply in the third quarter of 2022 after two peaks at high levels.

The indicator of input price trends stood at 56.2 points in the July-September period, down from 66.9 points in the previous quarter.

Problems with the procurement of raw materials still affected 38.1% of industries in the third quarter of the year, but far less than the 52.8% of companies that reported this problem in the second quarter.

“Despite the slowdown in production in September and the less optimistic expectations, the normalization of the supply chain is a key element for the revival of industrial production,” assessed CNI economist Larissa Nocko.

The survey also shows that industrial entrepreneurs’ expectations for the next six months deteriorated in October, although they are still optimistic – over 50 points.

The demand indicator decreased from 59.3 points to 56.9 points.

The index for the number of employees fell from 53.9 to 52.3 points. And the investment intention variable declined from 59.0 points to 57.4 points.

Between October 1 and 11, 1,739 companies were surveyed, of which 696 were small, 601 medium-sized, and 442 large.