August Turnover in Brazil’s Machinery Industry 9.9 Percent Greater than in 2018

RIO DE JANEIRO, BRAZIL – The Brazilian machinery and equipment industry grew 9.9 percent in August but retreated two percent compared to the same month last year, totaling R$7.55 billion (US$1.89 billion) in total net revenue. The data were released yesterday, September 24th, by the Brazilian Association of Machinery and Equipment Industry (ABIMAQ), which includes the sector’s industries.

The accumulated growth in the year was only 1.1 percent. According to the organization, in 2019 the reduction in sales is due to the slowdown in international market activities, while in the domestic market machinery sales increased by 5.9 percent.

“The good news is that we are growing domestic market consumption by 5.9 percent, but the bad news is that this growth is very small and was also offset by declining exports,” said the executive president of ABIMAQ, José Velloso.

The sector’s trade balance had a negative US$1.248 billion result in August. Exports shrank by 2.6 percent over the previous month and 15.7 percent over the same month in 2018. As a result, the accumulated in the year worsened again and fell by 5.1 percent.

Imports increased by 23.7 percent in August compared to July and 59.6 percent compared to the same month last year.

According to ABIMAQ, the increase was a reflection of imports of components for power generation and valves, pipes and drilling equipment for the oil and gas exploration sector, particularly the purchase made in the United States of a drilling rig for oil, in the amount of US$590 million.

Apparent consumption

Apparent consumption recorded strong growth in August compared to July, at 26 percent, and in comparison to August 2018, at 40 percent.

This performance was mainly driven by the purchase of oil drilling machinery, which, if disregarded, would generate growth of only 1.2 percent in relation to July and 12.4 percent in relation to August 2018.

Growth forecast

ABIMAQ’s outlook is that the data recorded through August reflect the weak economic activity observed this year and suggest that growth expectations, of around five percent, will not be confirmed. The organization has revised expectations and growth should be around one percent in 2019.

Employment

The balance released yesterday shows low employment growth, at 0.1 percent in August and 3.9 percent over the same month last year. Until last month 8 thousand jobs were created. Currently, the sector employs 308,944 people.