Letter IEDI n. 901–The Industry in November 2018: no activity
In both October and November, the industry barely moved. It varied -0.1% and then +0.1% in the seasonally adjusted series, indicating that the sector closed 2018 in standby mode, waiting for the new government's resolutions. The problem is that this stability came after months of decline, which marked the second half of last year.
In November, despite the steadiness of aggregate figures, most industrial branches and regions were in the red: 16 of the 26 branches followed by the IBGE and 9 of the 15 regional industrial parks registered production losses. Thus, it can be said that the month was more unfavorable than it appears at first sight.
As a consequence, the level of industrial production in Nov/18 was 2.7% below that of Jun/18, after the elimination of seasonal effects, indicating that the second half of last year was another period of discontinuity of the sector's recovery.
In summary, it is very likely that 2018 was indeed a turning point year. In its first nine months, performance was positive, at +1.5% (in relation to the same period of the previous year), but it was lower than the overall figure for 2017 (+2.6%) and well below early 2018 projections (+3.6% in the first quarter/18, according to the Focus/BCB survey). The loss of dynamism was such that in Oct–Nov/18 production variation was negative at -0.1% (compared to the same period of the previous year).
Of the four industrial macro-sectors, only one was able to sustain its growth rate throughout 2018. This was the case of capital goods which, it seems, ended 2018 with a greater dynamism than in 2017, although much of this was due to the first half of the year. In Jan–Nov/18, the sector rose +8.8% versus +6.6% in Jan–Dec/17.
The +7.1% figure for Oct–Nov/18 suggests an acceleration in the production of capital goods at the end of 2018 compared to a pace of +6.6% in Q3/18, always in relation to the same period of the previous year. Behind this movement are capital goods for agriculture, energy and transportation. Capital goods for the industry itself, whose output is indicative of the sector's investment, has not done well since Q2/18 and recorded -2.2% in Oct–Nov/18.
Durable consumer goods, in turn, which led industrial dynamism in 2017 and early 2018, showed the sharpest deceleration last year, falling from +17% in Q1/18 to just +1.6% in Oct–Nov/18. The drop was led by those segments most related to the domestic market, such as home appliances and furniture. The automobile industry (automobiles and other transport equipment), which has a more significant export activity, was the one able to keep advancing.
Production of semi-durable and non-durable consumer goods, whose adherence to current family income and employment situation is even higher, recorded a loss in Q3/18 (-0.4%) and, considering the -0.1% rate of Oct–Nov, may also have stayed in the red in the last quarter of 2018. Negative results were recorded, mainly, in the branches of food, textiles and clothing, and leather and footwear.
Finally, influenced by the deceleration of consumer goods, intermediate goods recorded the worst result of the Oct–Nov period (-1.0%) and moved towards a 2018 growth rate (+0.6% until November) of only 1/3 of that registered in 2017 (+1.7%). Intermediate goods for food, textiles, and petroleum products are falling and, in some cases, this has been happening for a while.