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Brazil's industrial confidence continues to rise in August

Christian Fernsby ▼ | August 28, 2020
Confidence among Brazil's industrialists increased for the fourth consecutive month in August, almost fully rebounding from the negative impact of the coronavirus pandemic, a Brazilian economic think tank said on Thursday.
Brazil jobless
Rise in August   Brazil jobless
According to the Getulio Vargas Foundation (FGV), the Industrial Confidence Index rose by 8.9 points in August to 98.7, recovering 40.5 points or 93.8 percent of the 43.2 points it lost in March and April, when the pandemic started to take hold.

Topics: Brazil

"Confidence in the industrial sector maintained the tendency toward recovery that began in recent months in a consistent and broad manner. Although they are still dissatisfied with the level of demand, the opinion of business owners about the business climate at the moment has increasingly gotten closer to the pre-pandemic period," FGV said.

In August, 18 of the 19 industrial sectors analyzed saw an increase in confidence.

"For the next few months, the expectations indicators show a certain optimism, with more than 40 percent of the sector forecasting an increase in the pace of production. However, we observe that there is still a lot of uncertainty among companies, as evident from the difficulty of recovery of the business trend indicator," the think tank said.

The level of utilization of installed capacity rose from 72.3 to 75.3 percent, the same level as in March.

The percentage of companies optimistic about the current situation jumped from 19.1 to 27.2 percent, while those considering the current situation weak fell from 40.6 to 27.5 percent.

The level of inventories rose by 8.8 points, from 90.2 to 99 points, while demand increased by 4.7 points to 95.7. The inventory indicator is just slightly below March levels.

The Expectations Index grew by 9.1 points to 99.6, exceeding the level it had in March (96.2 points), although still lower than the 101.8 points registered in February.

The increase in the confidence of industrial entrepreneurs in August reflects the recovery of the Brazilian economy, which used to be severely affected by the pandemic, as various indicators have shown.

However, the recovery will not be enough to prevent the country's gross domestic product from falling by 5.46 percent this year, according to the financial analysts quoted by the Central Banks of Brazil.


 

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