Brazil’s Industrial Production Rises but Sales Remain Low

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Industrial production in Brazil registered a growth of 0.8 percent in May according to data from the IBGE (Brazilian Statistical Bureau). Although this is the second consecutive positive rate recorded by the Brazilian industry, some sectors, like the automobile industry still forecast weak months ahead.

With the results of May, the industry has accumulated a growth of 1.9 percent in the last two months, compensating for the retraction by 1.6 percent seen in March. In the annual comparison (May 2017/May 2016) this year’s results accumulated a growth of four percent, the highest growth of year/year since February of 2014.

Although in the first five months of the year industrial production registered a growth of 0.5 percent, in the accumulated result of the last twelve months production continues to in negative territory, with a 2.4 percent decrease.

IBGE manager, André Macedo, says although there is a clear improvement in the rhythm of Brazilian industrial production, he admits that the country’s industry is ‘still far from recovering what has been lost’.

“This increase in industrial production needs to be relativized,” Macedo told reporters during the presentation of the results. “There has been an improvement in the rhythm, but there is still an important space for industry to recover from the losses of the past.”

In the automobile sector, for example, production grew by a surprising nine percent in May compared to April, the highest rate since December 2016. The growth in production, however, may not be sustained, since automobile sales continue to decline.

In June, vehicle sales registered a three percent decline, with 277,194 units sold, considering all segments (automobiles, light commercial vehicles, trucks, buses, motorcycles, and others), according to FENABRAVE (National Vehicle Distribution Federation). For the first semester of 2017 sales are down by 5.48 percent.

FENABRAVE’s forecast for the sector in 2017, calls for a 1.6 percent retraction in sales when compared to 2016, with the automotive and light commercial segments, increasing by 4.3 percent while trucks and buses registering a retraction of 10.2 percent and motorcycles down by 13.5 percent, according to the entity.