Business grows once more in July, however is beneath pre-pandemic stage

Sector advanced 0.6%, slightly above expectations. Only ten of the 26 segments surveyed showed expansion, led by food production

THE industrial production grew 0.6% in July, but remains below the pre-pandemic level. Of the 26 segments surveyed, only ten showed expansion, evidencing the fragility of the sector and the challenge to maintain the growth of the Brazilian economy in the third quarter.

Analysts polled by Bloomberg had expected an increase of 0.5% compared to June. In the year, the industry accumulates a fall of 2% and, in 12 months, of 3%. The data are from the Monthly Industrial Survey (PIM), released this Friday by the IBGE.

It is the first sectoral indicator of the third quarter. Yesterday, the institute released the GDP for the second quarter, showing that the country grew 1.2%. The industry was one of the highlights, with an expansion of 2.2%, the highest since 2020, when the Brazilian economy was heavily affected by Covid.

Among activities, the biggest positive influence for the result came from the food products sector (+ 4.3%). It is the third consecutive month of advancement in this segment. The increase in the value of Auxílio Brasil from August onwards should maintain the expansion of the segment.

“This growth was quite widespread, from sugar to beef, pork and poultry, in addition to dairy products and soy derivatives”, explains Research manager André Macedo.

The machinery and equipment segment dropped 10.4%. And the automotive industry retreated 5.7% in the month, eliminating part of the strong growth in the months of May and June 2022.

Despite the drop in July, August data shows that August production reached around 200,000 units for the third consecutive month. August also ended with no automakers completely shut down, after 20 temporary shutdowns in the first half.

Economists estimate that the industrial sector should be sidelined this year, given the rise in interest rates, which affects the investment capacity of companies, and the disorganization of global chains that jeopardizes production.

Source: O Globo Agency