Brazilian Industry Records Declining Production in June

RIO DE JANEIRO, BRAZIL – From May to June, industrial activity declined in ten of the fifteen locations analyzed, according to data from the Regional Industrial Monthly Survey, released today by the Brazilian Institute of Geography and Statistics (IBGE). Rio de Janeiro, with a 5.9 percent drop, and São Paulo, with a 2.2 percent retraction, were the locations that most influenced the 0.6 percent drop in the national index.

According to research analyst Bernardo Almeida, São Paulo’s industry was negatively impacted by the motor vehicle sector. “The sector had already been showing volatility, reflecting the current economic situation. With the crisis in Argentina, the main market for exports of Brazilian vehicles, production does not flow. Besides, unemployment in Brazil causes lower productivity and lower demand, which generates caution in investment and consumer decisions,” he explains.

In Rio de Janeiro, on the other hand, it was the extractive sector that most influenced the 5.9 percent drop. “Rio de Janeiro’s industry does not have mining, so this decline has nothing to do with the Brumadinho accident,” says Bernardo Almeida. “It is related to oil and natural gas extraction. We can also highlight the negative influence of the oil products sector, mainly refining,” he adds.

Conversely, Pará registered the highest growth in June, with a 4.9 percent increase, the second consecutive positive rate, a period with a 68 percent increase. These results halted three months of decline, accumulating a reduction of 38.6 percent.

“The iron ore extraction sector accounts for 88 percent of Pará’s industry. One must wait to see how the sector will behave, but so far it has managed to reverse the accumulated decline and keep an upward trajectory,” says Almeida.

With a one percent retraction in the second quarter of the year, the industry continued the negative trend observed in the first quarter (-2.3 percent), albeit with less rapidity.

This was reflected in nine of the fifteen locations surveyed, notably the Amazon (from -5 percent to 4.2 percent), Ceará (from 0.4 percent to 5.9 percent), Pernambuco (from -2.4 percent to 2.8 percent), Bahia (from -3.4 percent to 0.6 percent), Rio Grande do Sul (from 6.1 percent to 9.8 percent), Santa Catarina (from 2.9 percent to 6.4 percent), and São Paulo (from -2.7 percent to 0.7 percent).