Brazil’s Industrial Production Drops 0.9% in May Amid Southern Floods

In May, Brazil’s industrial production fell 0.9%, the second consecutive decline after April’s 0.5% drop, reports IBGE.

This reduction erased the 1.1% gain achieved between February and March.

Consequently, the industry now operates 1.4% below the pre-pandemic level of February 2020 and 17.8% below its peak in May 2011.

Compared to May 2023, industrial production dropped by 1.0%, following an 8.4% rise in April.

The industrial sector has grown by 2.5% in the first five months of 2024. Over the past 12 months, the sector saw a 1.3% growth, although the pace has slowed.

Out of 25 activities surveyed, 16 experienced a decline in May. The most significant downturns were in:

• motor vehicles, trailers, and semi-trailers (-11.7%) and
• food products (-4.0%).
• These sectors were heavily impacted by the floods in Rio Grande do Sul.

Other sectors that declined included:

• chemicals (-2.5%),
• electrical machinery and equipment (-6.3%),
• tobacco products (-28.2%),
• metallurgy (-2.8%),
• machinery and equipment (-3.5%),
• printing and reproduction of recordings (-15.0%), and
• various other products (-8.5%).

Brazil’s Industrial Production Drops 0.9% in May Amid Southern Floods

Brazil’s economy has faced numerous challenges, with the recent floods exacerbating existing issues.

The floods in Rio Grande do Sul not only disrupted local industries but also affected the national supply chain.

For instance, the motor vehicle sector saw significant impacts due to halted operations in local plants, causing ripple effects across the country.

To mitigate these impacts, some industrial plants, such as one in São Paulo, granted collective vacations.

Additionally, the vehicle sector faced a high comparative base from April’s 13.8% increase and a strike-induced halt at another manufacturer.

In the food sector, May marked the second month of decline, with a cumulative loss of 4.7%.

Unfavorable weather conditions in the latter half of May led to a significant decrease in sugarcane processing, affecting sugar production.

Floods affected key sectors like poultry, beef, pork, and soy derivatives, crucial to 15% of Brazil’s industrial output.

This underscores Brazil’s industrial susceptibility to environmental and logistical disruptions, stressing the need for more resilient supply chains.