Industrial confidence up 2.3% in October

The Industry Confidence Index (ICI) measured by Fundação Getúlio Vargas (FGV) went up 2.3% in October, going from 66 to 67.5 points. The result reflects a 8.9% rise in the Expectations Index (IE), which reached 69.7 points after a record low of 64 points in the previous month. The Present Situation Index (ISA) went down 4% going to 65.2 points, the lowest level in the time series.

“The Expectations Index hike in October is a welcome result, but should be interpreted [cautiously] as a sign of attenuation of the negative industrial production and employment figures since the beginning of the year,” said Aloisio Campelo Jr., Assistant Superintendent for Business Cycles at FGV-IBRE.

The proportion of companies that forecast an increase in employed staff rose from 6.1% to 7.8%, whereas the share of those expecting a reduction shrank from 34.5% to 24.9%. This factor has been the most significant contribution to the IE performance in October.

The share of businesses with surplus inventory, the main contribution to the ISA deterioration, rose from 22% to 24.5%, a peak since July 2003 (25.7%). Conversely, the share of companies with insufficient inventory fell from 1.3% to 0.3% of the total.

The Level of Capacity Utilization (NUCI) remained relatively stable in October, going up a slight 0.2 percentage points, from 76.5% to 76.7%.

“For the next six months [as from October], expectations continue to worsen, indicating that the [industrial] sector remains pessimistic about the prospects for a continued improvement in the business environment,” Campelo completed.

Translated by Mayra Borges