Fundação Getulio Vargas’ Industry Confidence Index rose 8.9 points in August, to 98.7 points. After four monthly increases in a row, the index has regained 40.5 points, or 93.8% of the 43.2 points lost in March and April.

“The industrial sector’s confidence has continued on its recovery trend of recent months in a consistent, broad-based manner. Although business people are still dissatisfied with the level of demand, their opinion of the current business situation has been moving steadily back toward the pre-pandemic level. For the coming months, the expectations indicators show a certain optimism, with more than 40% of the sector foreseeing a faster pace of production. However, we note that there is still a lot of uncertainty among companies, demonstrated by the slow recovery in the business trend indicator,” says FGV IBRE economist Renata de Mello Franco.

In August, 18 of the 19 industrial segments surveyed reported an increase in confidence. The month’s result reflects both better assessments of the present moment and more optimistic forecasts for the next three months. The Current Situation Index rose 8.7 points, to 97.8 points. The Expectations Index went up 9.1 points, to 99.6 points, higher than in March (96.2 points) but below February (101.8 points).

All three indicators that make up the Expectations Index experienced significant growth. Forecast production and forecast employment rose 8.8 points and 9.3 points, respectively, to 107.8 points (the highest level since 108.0 points in April 2013) and 102.3 points (the highest figure since 102.8 points in March 2018). Both indicators are now above the 100-point neutral level. In turn, the indicator that gauges executives’ optimism about the evolution of the busines environment in the six following months increased 8.7 points, to 88.8 points, but it is still 16.1 points below the number seen in February and the neutral level.

Regarding the present moment, there was an improvement in business people’s satisfaction with the current busines situation. This indicator rose 12.1 points, to 99.1 points, the highest level since February. It had the biggest single impact on the Current Situation Index. The proportion of companies that view the current situation as good increased from 19.1% to 27.2%, while the share that consider it weak fell from 40.6% to 27.5%. The level of inventories went up 8.8 points, from 90.2 points to 99.0 points, and demand grew 4.7 points, from 91.0 points to 95.7 points. Only the inventory indicator is lower than it was in March of this year.

The Installed Capacity Utilization Level went up 3.0 percentage points, from 72.3% to 75.3%. As a result, it has now returned to the level last seen in March, and it is just 0.9 percentage points below February (76.2%).

The study is available here.