Brazil: industrial confidence shows 6th consecutive drop

RIO DE JANEIRO, BRAZIL – The Industry Confidence Index (ICI) of the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV/Ibre) fell for the 6th consecutive month, 1.7 points in January, to 98.4 points, the lowest level since July 2020 (89.8 points). In quarterly moving averages, it maintained the negative trend by dropping 2.3 points.

The industrial sector starts 2022 with a widespread drop in confidence among the segments, with the uncertainties weighing on this result due to the increase in cases of the pandemic that has led to staff reductions and the expansion of restrictions in countries that have felt the pandemic’s resurgence.

The month’s result was influenced by a worsening of both the evaluations about the current situation and the perspectives for the coming months. The Current Situation Index (ISA) dropped 1.2 points to 99.8 points, the lowest value since August 2020 (97.8 points). The Expectations Index (EI) dropped 2.0 points to 97.1 points, the lowest since April 2021 (96.9 points).

Among the items that make up the ISA, the worst performance was in the indicator that measures the current business situation, with a drop of 6.4 points to 89.4 points, the lowest value since July 2020 (87.0 points). The total demand indicator dropped 4.2 points to 99.5 points and accumulated a loss of 14.1 points in the last seven months.

Of the indicators that make up the IE, the production forecast for the next three months was the one that most influenced the fall in the ICI in January, when it dropped 4.7 points to 94.1 points, the lowest level since May 2021 (93.1 points). The employment forecast for the coming months remained relatively stable by varying 0.3 points to 102.1 points.

For the next six months, the business trend continues on a negative path for the sixth consecutive month, falling 1.2 points in January to 95.4 points, the lowest level since August 2020 (88.8 points).

The Level of Capacity Utilization (Nuci) returned to the November level, rising 1.0 percentage point to 80.7%.

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