Brazilian Industry Confidence remains stable between June and July
The Industry Confidence Index (ICI), caluclated by FGV’s Brazilian Institute of Economics (IBRE), remained stable between June and July 2018, at 100.1 points. In the quarterly moving averages metric, the ICI fell 0.3 point, down to 100.4 points.
“Industry confidence has been floating around the neutral level of 100 points in 2018. The July survey adds worsening employment expectations and an increase in idleness to this apathy, signaling continued slow and gradual recovery of the Brazilian economy. The improvement in the assessments on the current situation stems mainly from the standardization of inventories after the buildup because of the interruption in cargo transport services in late May”, said Tabi Thuler Santos, coordinator of the IBRE’s Industry Survey.
There was an increase in confidence in 11 segments and a decrease in eight of the 19 surveyed industry segments in July. Close to the neutral level of 100 points and with a symmetrically opposite evolution, the Current Situation Index (ISA) advanced 3.9 points, up to 99.0 points, and the Expectations Index (IE) fell 3.9 points, down to 101.1 points.
The normalization of inventory levels after the truckers’ strike was the greatest influence on the ISA in July. The percentage of companies with excessive inventories fell from 12.8% to 7.6%, similar to the level reported in May (7.9%). The proportion of companies with insufficient inventories remained relatively stable, shifting from 4.5% to 4.3% of the total.
After increasing in the two previous months, the worsening employment expectations determined the decrease in the IE for the month. The expectation indicator with the evolution of occupied staff in the next three months fell 11.7 points, down to 95.6 points – the lowest level since January (93.5). There was a decrease in the proportion of companies foreseeing an increase in the workforce, from 22.7% to 17.4%, and an increase in the number that expect a reduction, from 12.1% to 15.0% of the total.
The Industry Installed Capacity Usage Level (NUCI) dropped to 75.7% in July, 0.5 percentage point (p.p.) below the result recorded in June. After experiencing a period of expansion starting in the fourth quarter of last year, the NUCI recorded the second consecutive reduction in July, retreating to the lowest level since February.
The July 2018 edition gathered data from 1,059 companies between July 2 and 25. The next Industry Survey results will be published on August 28, 2018. Preliminary results will be released on August 21. Go to the website to learn more about the study.