Brazilian industry shows high use of installed capacity

Optimism among investors in the sector is still high, CNI reported

Published in 23/09/2021 - 15:01 By Agência Brasil - Brasília

August’s Industrial Survey indicates that the use of the industry’s installed capacity is still elevated in the country, above what had been registered in previous years, and employment is also on the rise in the sector. The data were made public today (Sep. 23) by the National Industry Confederation, CNI.

Conversely, stock levels remained virtually unchanged in the month, and is still below what had been planned by companies. This is the third consecutive month in which the difference between the level of effective stock and what was desired by the companies keeps steady. CNI pointed out, however, that this difference is considerably smaller than in the same month in 2020, when the problem of shortage of supplies and raw materials was becoming more critical.

Expectations among investors also shows stability in the month, “bu they are especially positive,” CNI declared, also expecting an increase in demand and exports, just as the number of workers and purchases of raw materials. “In this scenario—of optimism among investors and high use of the installed capacity-the intention of investing is still elevated among investors,” the entity declared.

August figures

The use of the installed capacity (UIC) increased one percentage point to 72 percent from July to August 2021. The percentage for he month is equal to the one registered in the same month in 2014 and surpasses the one observed in August in the following years.

According to the CNI, the result is higher even than August 2020, “when the industry was in solid recovery after the standstill brought about by COVID-19.” Since May this year, the UIC has kept above the average of the same months in 2011 and 2019.

Industry investors also went back to showing new growth in production from July to August. This is the fourth consecutive month investors in the manufacture and extraction industry of all sized point toward an increase compared to the previous month. The index of evolution in production stood at 53 points, above the 50 point threshold separating a decline from an increase in the output.

Employment in industry, also per the survey, is still showing a growing trajectory. The index of evolution in the number of workers stood at 52.3 points, above the threshold for the fourth month in a row.

Stock levels, in turn, are still below planned, and the index of evolution was 49.7 points in August. The entity explains that, as the value was near the 50 point threshold, it shows that stocks were stable last month.

The index of effective stock levels compared to the planned was practically unchanged, and going from slightly above 48.7 points in July, the same as in June, to 48.6 points in August. The index is therefore reported to show yet another month in which stocks were below what companies had planned. In 2020, the difference between effective and planned was much larger: 45.2 points.

Elevated optimism

The indexes on investors’ expectations shrank between August and September, but all of them remained well above 50 points, showing elevated optimism among business people, according to the CNI. “The indexes are especially high for the month: they surpass what was observed in the same month in the previous years since 2011, except for the value registered in September 2020, when indexes had been influenced by a strong recovery in activity that was taking place in that period,” the entity explained.

The index of intended investment also sank from 59 to 58.5 points from August to September 2021. “Despite the fall, the index is still well above its historic average (50.5 points) and is the highest for the month since the beginning of this time series. The index of intended investment also sank from 59 to 58.5 points from August to September 2021. “Despite the fall, the index is still well above its historic average (50.5 points) and is the highest for the month since the beginning of this time series.

The survey heard 1,929 companies from September 1–15. Altogether, 779 are small, 671 medium, and 479 are large companies.

Translation: Fabrício Ferreira -  Edition: Maria Claudia / Nira Foster

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