Brazilian manufacturing output dropped by 0.4 percent in June from May, breaking a four-month streak of positive numbers and reaching the worst year-on-year result since March 2021.
The industrial sector remains 1.5 percent below pre-pandemic levels and 18 percent below its May 2011 peak.
In June, three of the four major economic segments surveyed showed a reduction in production. After falling in previous months, consumer durable goods was the only segment that experienced a bump.
André Macedo, a manager at the Brazilian Institute of Geography and Statistics (IBGE), points out that even with the positive numbers until May, manufacturing had still not recovered from its January contraction. The sector continues to deal with increasing production costs and restricted access to inputs — problems caused first by the pandemic and later aggravated by the war in Ukraine.
In June, monthly input costs for the Brazilian industry rose by 1 percent. Year-to-date, prices have already increased by more than 10 percent. “Industrial activity has been marked by stoppages, reduced working hours, and companies placing workers on collective vacations,” says Mr. Macedo.
Supply issues are not the sole problem of Brazil’s industrial sector. Double-digit inflation, high interest rates, which make credit more expensive, and shrinking wages have cooled off families’ consumption.
Confidence in the economy among industry leaders fell in July for the first time in four months, according to a survey by think tank Fundação Getulio Vargas.