Industry resumes growth in December, but is still weak

The Brazilian industry resumed growth in December (2.9% compared to November), even more than expected (1.6%, according do Valor Data), which helps to sustain a more positive view of economists for the GDP of the fourth quarter of 2021. The result, however, does not change the balance that 2021 was a challenging year for the sector, nor the prospect that 2022 will likely be a new period of contraction.

Industrial production had not recorded growth since May 2021 (1.2%). Besides these two months, there was a positive result in January (0.2%) and stability in November. As released on Wednesday by the statistics agency IBGE, 20 of the 26 activities analyzed rose in December, with vehicles (12.2%) standing out — the sector grew 20.3% in 2021, but still behind the 27.9% drop in 2020.

With the December result, the industry managed to be stable in the fourth quarter of 2021, compared to the three months immediately before, after three consecutive quarterly declines.

Three of the four major categories advanced in 2021, especially capital goods (28.3%), driven by agriculture and construction. The exception was semi- and non-durable goods (-0.5%).

Industry as a whole accumulated a 3.9% rise in 2021, the first year of expansion since 2018 (1%) and the highest annual rate since 2010 (10.2%). It was not enough, however, to offset the entire 4.5% drop in 2020, coming from -1.1% in 2019. “It is necessary to relativize the advance of 2021 with the losses of 2020 and 2019,” says André Macedo, manager of the Monthly Industrial Survey (PIM).

The industry is still 0.9% below the pre-pandemic level (February 2020) and 17.7% away from the highest level of the series (May 2011). The numbers for 2021 reflect a year marked, on the supply side, by more expensive production costs – such as higher energy tariffs – and the persistence of problems in global chains. On the demand side, high inflation eroded the purchasing power of families, which became even flatter as the labor market recovers with low-paying jobs.“

It was a good result to end the fourth quarter,” says Luana Miranda, economist at GAP Asset, regarding the rise in the industry in December. She recalls that October was “very bad” for the major sectors (industry, retail and services) and November brought mixed numbers, with the industry still in decline. Before the December PIM, Ms. Miranda projected a GDP of around 0.1% for the fourth quarter of 2021, a number that, now, “should go up a little bit,” she says.

The numbers reflect a year marked, on the supply side, by higher production costs – such as higher energy tariffs – and the persistence of problems in the supply chains. On the demand side, high inflation has eroded the purchasing power of families, which has been even more pressured with a labor market recovery based on precarious, lower-wage jobs.

Source: Valor International

https://valorinternational.globo.com