Brazil’s Industrial Sector Has Optimistic Outlook for Future

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – After 21 months of decline, Brazilian industrial production has finally stopped falling, according to the monthly survey conducted by the National Confederation of Industry (CNI) to measure industrial intentions. Data from CNI shows a more optimistic outlook for industry with the production index at 50.8 points in August, mainly due to the increase in production of large companies.

“A good portion of the large companies are exporting and do not only depend on domestic demand. In addition, in August end-of-year orders begins. Since stock is adjusted, any increase in demand, however small, requires an increase in production,” says CNI economist Marcelo Azevedo.

While the survey shows that the outlook for the next six months remains positive there is still the expectation of further increase of unemployment in the industrial sector. The expectation index number for employment in September, for example is of 47.9 points. Anything below the fifty-point level is considered a negative outlook.

The more optimistic forecasts influenced the investment intentions by businessmen. The investments intention index increased by 1.4 points in September compared to August and reached 43.4 points.

“Over the past five months, the index shows a growth trend. In the period, the indicator increased by 4.4 points,” stated a CNI press release. The index varies from zero to one hundred points and the higher the index, the greater the intention to invest.

At the beginning of September data from the IBGE (Brazilian Statistical Bureau) showed that industrial production in Brazil remained virtually stable in July, increasing only 0.1 percent in relation to June. This is the first time since November 2014 that the index was above fifty points.