Brazil industrial output down in June

Production and employment in Brazil's industry took a downward trajectory once again in June, the National Confederation of Industry (CNI) reported today (Jul 26). The indicator for employment evolution stood at 47.7 points and the employed saw a score of 47.6 points last month. Scores vary from zero to 100—those below 50 show a decline, those above 50 mean an increase.

The use of installed capacity also shrank to 65% and stands at 3 percentage points below the historic average of 68% ed since 2011 for the months of June. The high idleness rate in the industrial complex has kept eagerness to invest low. Intended investment remained at 46.6 points.

The Confederation believes that the previous estimates coupled with the actual results suggest that the industry is headed towards recovery, but also that the way to meet this goal is filled with difficulties. “Despite the negative results, the outlook of investors is positive and shows a short-run improvement,” a note issued by the Confederation reads.

The survey also indicates a high tax load, with 45.2% of responses mentioning it as one of the main obstacles to industrial activity. Other problems facing entrepreneurs in the second quarter of the year were poor demand, default on the customers' part, elevated interest, and the lack of working capital. The conditions for the access to credit are also slowly improving, but remain more difficult than usual, CNI remarked.

June's survey covered 2,281 companies all across the country, of which 940 are small-scale firms, 828 medium, and 513 large-scale corporations.

Translated by Fabrício Ferreira