Small factories in Brazil less affected by shortage of raw materials

The scarcity and cost of raw materials are affecting micro- and small industrial businesses in Brazil less significantly. The conclusion was drawn by quarterly survey Panorama da Pequena Indústria (“An Overview on Small Industrial Companies”), released today (Nov. 7) by national industry confederation CNI.

From July to September, the lack or high cost of raw materials continued to be the main concern in the manufacturing industry, but less so than in the previous quarter, the survey reports. In construction, high interest became the main obstacle. In extraction, tax burden was once again the number-one issue.

In the view of CNI analyst Paula Verlangeiro, pricier and harder-to-get raw materials has still been taking its toll on industry, but the problem was less marked in the third quarter and should further recede by the end of the year.

Financial situation

The survey showed an improvement in the financial landscape of micro and small industries. The Financial Situation Index reached 43.7 points in the third quarter—the highest since 2013. According to the confederation, the advance can be explained by the increase in the indicators for satisfaction with operating income and ease of access to credit, which continued to grow, despite the high interest rates.

The sector’s Performance Index averaged 49 points, thus above the historical average for the quarter (45.3 points) and 1.6 points up from the third quarter last year.

Confidence

The Industrial Investor Confidence Index for small-sized industrial businesses reached 58.7 points in October. The indicator sank from September (61.9 points) but remains above the historical average of 53 points, which spells steady confidence. In the survey, levels above 50 points mean optimism. Every month, the study hears some 900 entrepreneurs from small-sized companies.

Among the items surveyed are production volume, number of employees, use of installed capacity, satisfaction with operating profit and financial situation, ease of access to credit, expected evolution in demand, and intention to invest and hire.