Letter IEDI n. 1073—Renewed losses
For the industry, the deceleration trend hinted in the last months in the wake of the worsening of the health situation, the reduction and subsequent extinction of the emergency programs and the high level of unemployment led to another output drop in Feb/21.
The result was -0.7% compared to the previous month, seasonally adjusted. Since the most acute moment of the COVID-19 shock, in April last year, industrial production had not registered a negative variation in this comparison.
The recent inflection was widespread, with negative rates from both a sectoral and regional point of view. It reached 14 of the 26 branches surveyed by the IBGE, that is, 54% of the total, with emphasis on textiles, vehicles and leather and footwear, and 10 of the 15 regional parks, that is, 67% of the locations identified by the survey, including São Paulo and the South region, which had been working as engines of industrial recovery.
As a result, the confidence indicator of industrial entrepreneurs has been weakening and the component that indicates their view of the current situation in the sector slipped into pessimistic territory in Mar/21. According to the CNI measure, this assessment was below 50 points for the first time since Aug/20, suggesting the continuation of a challenging scenario for industrial expansion in the coming months.
Inventories remained low, especially in sectors such as metal and wood products, leather and transportation equipment, contributing to vulnerabilities in production chains. However, in aggregate, industrial inventories have been approaching the stability line, progressively removing stimuli from production in order to restore levels considered adequate.
In Feb/21, the general decline was caused mainly by consumer durables, whose production decreased 4.6% compared to Jan/21, with seasonal adjustment, but the negative sign also affected two other macro-sectors: capital goods, with -1.5%, and semi- and non-durable consumer goods, with -0.3%. The only exception was intermediate goods (+0.6%), which have been oscillating between highs and lows.
Durable consumer goods were the macro-sector with the worst result also in relation to Feb/20 (-8.6%), followed by semi- and non-durable consumer goods (-1.6%). Both sectors had already suffered previous falls, which does not bring good signs for this beginning of 2021.
Apparently, the loss of recent dynamism in the industry has been driven by branches whose markets depend on household consumption, which has slowed down not only by the fear and isolation arising directly from COVID-19, but also by unemployment and the end of aid paid to families.
In the first two months of 2021, durable consumer goods registered -6.3%, due to automobiles but also to the falls in household appliances and Other transport equipment. Semi- and non-durable consumer goods, in turn, fell 1.1%, in line with the 4th quarter/20, due to food branches, such as meats, dairy products and beverages, in addition to fuels.
Capital goods, which grew +16.1% compared to Feb/20 helped by low bases of comparison, managed to maintain the intensity of the Q4/20 high (+14.7%) also in Jan–Feb/21 (+16.6%), thanks to capital goods for agriculture and construction. Capital goods for the industry itself have slowed down.
Finally, intermediate goods may have their third consecutive quarter of expansion now at the beginning of 2021, but they will probably undergo some accommodation, considering the figures for early in the year: +4.9% in Q4/20 and +1.7% in Jan–Feb/21 compared to the same period last year. Food and oil products intermediaries returned to the red and those in the auto industry saw their losses worsen (-12.4% compared to Jan–Feb/20).