Brazil’s industrial confidence falls in October to lowest level since March

Industrial confidence in Brazil plummeted in October and reached the weakest level since March, with worsening of both the assessment of the current situation and expectations, the Getulio Vargas Foundation (FGV) reported Thursday.

The Industry Confidence Index (ICI) dropped 3.8 points in comparison with the previous month, according to FGV’s data, reaching 95.7 points, the second fall in a row and the worst result since March 2022.

The Current Situation Index (ISA), which measures the business people’s feelings about the present moment of the industrial sector, retreated 4.5 points and went to 96.4 points, according to FGV, the lowest level since July 2020, when Brazil was still in lockdown.

“There is a worsening of evaluations about the current situation influenced by a perception of reduced domestic and foreign demand, increased inventory levels, and still difficulties in obtaining inputs by some segments,” explained in a note by Stéfano Pacini, an economist at FGV IBRE.

The Expectations Index (IE), an indicator of the perception about the coming months, fell 3.0 points to 95.0 points, the weakest result since March this year.

“There is a worsening of expectations that may be related to an expected global deceleration and a Brazilian economic scenario that considers inflation above the target for 2023 and, therefore, a more contractionary policy,” added Pacini.

In August, the Brazilian industry again registered a drop in production of 0.6%, highlighting the losses in oil products, according to the most recent data from IBGE.