Brazil’s Industrial Output Slows Amid Rising Costs and Softer Confidence

Brazil’s industrial production slipped 0.2% in October and 0.6% in November 2024, revealing a second consecutive monthly drop of 0.8%.

Analysts observe that transformation activity, which accounts for 85% of total industry, receded 1% in November. This occurred after a slight 0.1% rise in October, while the extractive sector rose 0.1%.

The general industry advanced 3.2% between January and November. It stands 15.1% below its 2011 peak and 1.8% above pre-pandemic. Year-over-year, industry climbed 1.7% in November, driven by some robust performances.

Capital goods fell 1.7% in November but rose 14% compared to November 2023. Intermediate goods dropped 0.7% but advanced 1.6% year-over-year. Durable goods slipped 2.1% in November but expanded 19.5% against November 2023.

Semi and non-durables receded 2.8% in November, down 2.7% year-over-year, after a 1.1% drop in October. Those consecutive declines added up to a 3.9% loss over two months.

Brazil’s Industrial Output Slows Amid Rising Costs and Softer Confidence. (Photo Internet reproduction)

Vehicles led the negative side with an 11.5% decline in November. That drop followed two months of growth and still left output 14.2% above late 2023. The segment rose 15.7% year-over-year and advanced 12.4% from January to November 2024.

Research manager André Macedo attributes part of this slowdown to food price inflation, which reduces disposable income. He also cites higher dollar costs and contracting monetary policy as additional pressures on production.

Challenges and Outlook for Brazil’s Industrial Sector

These factors dampen both business confidence and consumer spending, which historically drive year-end industrial activity. Economist Stéfano Pacini from FGV Ibre sees the two-month decline as a signal that 2024’s earlier momentum may be fading.

Industry still shows 3.2% growth from January to November. That pace surpasses the 0.1% uptick in 2023, yet faces tighter credit conditions ahead.

Pacini notes that robust employment helped sustain demand throughout 2024, but an uncertain macroeconomic outlook now looms. Over the past 12 months, the sector grew 3%, while transformation advanced 3.2%.

These results remain modest compared to pre-pandemic records. Many observers expect higher rates and inflationary pressures to hamper investments and productivity in 2025. Progress hinges on private initiative and cautious planning.

Observers note that the final quarter points to a clear loss of intensity, with the industry down 0.8% across October and November. Many participants in the market remain watchful as they navigate uncertain times.

They place a high value on freedom and self-responsibility. Analysts see no immediate change in the trend unless confidence and purchasing power recover in tandem.