Brazil’s industrial confidence rises to four-month high in June, but risks remain – FGV

RIO DE JANEIRO, BRAZIL – Industrial confidence in Brazil rose to its highest level in four months in June, reflecting improved expectations, although risks such as input shortages and rising costs remain in play, the Getulio Vargas Foundation (FGV) said Monday.

The Industrial Confidence Index (ICI) rose 3.4 points to 107.6 this month, the highest level since February this year (107.9).

This reading was “influenced by the advance of expectations regarding the coming months,” said in a note Claudia Perdigão, economist at FGV IBRE, highlighting that “the recovery of external economies and the advance of the vaccination process in the country contribute to the increased optimism of companies.

The Expectations Index (IE), an indicator of business owners’ assessment of the coming months, rose 5.0 points to 104.0 in June, registering its second consecutive increase after four months of decline.

In turn, the index of current conditions (ISA) rose 1.8 points to 111.3, breaking a streak of five consecutive declines.

Despite the higher confidence in June, caution was warranted, Perdigão warned. “The sector is still struggling with input shortages (and) increased costs, which include the flag change for electric power, could be limiting factors for a more robust recovery in the second half.”

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