Brazilian industrial output skid continues
The new year brought no new momentum for the industrial sector, new data showed today, as factory output was down 0.3 percent in January. Over the past 12 months, the sector shrunk by 0.2 percent.
After a 1.3 percent monthly growth spike in October 2022, the sector has lost steam in each of the following months. “Although manufacturing showed some improvement in behavior at the end of last year, 2023 started with a loss in production, and remains far from recovering the losses of the recent past,” said André Macedo of the Brazilian Institute of Geography and Statistics.
Many issues factor into the results. High inflation has corroded Brazilians’ purchasing power, double-digit interest rates have hurt durable goods manufacturers (who are sensitive to credit availability), and many industrial segments still have issues accessing inputs.
The biggest drops in January came from the pharmaceutical industry (down 13 percent) and car manufacturers (down 6 percent). The latter was already coming off a 3.7 percent decline in December.
Earlier this month, multiple carmakers halted production and sent assembly line employees on vacation. The list includes General Motors, Hyundai, and Stellantis (which owns Fiat, Jeep, Peugeot, and Citroën). Factory stoppages are aimed at holding back production to avoid a large accumulation of inventories, which would put downward pressure on car prices.
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