In the first quarter of 2025, Brazilian industry continued to grow, but at a more modest rate, reflecting the shift to a context of high interest rates. The sector's slowdown, already evident at the end of last year, intensified in the early months of 2025 and became more widespread, although March alone showed a relatively positive performance.

In Jan–Mar 2025, industrial production recorded a 1.9% year-on-year increase, significantly lower than the 3.9% rate of Q3 2024 and the 3.1% of Q4 2024. Much of this result was driven by March, which saw a 3.1% increase compared to March 2024 and a 1.2% rise in the seasonally adjusted series, following two consecutive months of stability.

Overall, the first quarter saw a loss of momentum in three of the four industrial macro-sectors and in 68% of the sectors tracked by the IBGE. The share of sectors experiencing negative growth also doubled, from 16% in Q4 2024 to 32% in Q1 2025.

Production of capital goods, which had been growing at double-digit rates (+14.2% in Q4 2024) after a prolonged negative period between mid-2022 and early 2024, recorded a more modest 5.2% in Jan–Mar 2025. This slowdown was particularly evident in capital goods for transportation, industry, energy, and especially mixed-use capital goods, which remained virtually stagnant.

This macro-sector was also the only one to underperform in March 2025, when overall industrial production improved compared to previous months. Its output fell by 0.7% compared to February 2025 (seasonally adjusted) and by 0.2% compared to March 2024.

This reflects the impact of rising interest rates in Brazil and growing uncertainties during the period, particularly due to changes in global trade driven by U.S. protectionism. These factors reinforced a scenario of weakening investment at the start of the year.

Production of durable consumer goods, also sensitive to interest rates, saw a more pronounced slowdown in items requiring greater household budget commitment or higher indebtedness. Examples include automobiles (from +14.1% in Q4 2024 to +8.7% in Q1 2025) and white goods appliances (from +20% to +5.1%). The furniture segment also stopped growing at double-digit rates.

Despite this, durable consumer goods remained the fastest-growing macro-sector, with a moderate slowdown from 17.2% in Q4 2024 to 11.6% in Q1 2025.

For intermediate goods, growth halved from the end of 2024 (+2.8% in Oct–Dec) to the start of 2025 (+1.3% in Jan–Mar), largely due to the automotive sector (from +19.7% to +9.6%). Other factors included the loss of dynamism in inputs for construction, steel, and packaging, as well as declines in the production of cellulose and petroleum-derived inputs.

Finally, the only macro-sector to show improvement compared to the last quarter of 2024, though without regaining the vigor seen throughout most of 2024, was semi-durable and non-durable consumer goods, which recorded +0.6% in Jan–Mar 2025 compared to -0.2% in Oct–Dec 2024. This improvement was driven by fuel production but also supported by the relative resilience of pork and poultry slaughter and the pharmaceutical sector.

Despite the production increase in March 2025, it was accompanied by a reduction in inventories, which could support continued expansion in the coming months. According to the CNI, only 20% of sectors reported excess inventories. However, demand may have also weakened, which would explain the deterioration in industrial entrepreneurs' assessment of the current business situation in April 2025, as indicated by both CNI and FGV indices and by the PMI Manufacturing.

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