Brazil: Industrial sentiment plunges to five-year low in August; consumer sentiment also weakens
Latest reading: The seasonally adjusted consumer confidence index published by the Getúlio Vargas Foundation (Fundação Getúlio Vargas) inched down to 86.2 in August from July’s 86.7. As a result, the index moved further below the 100-point threshold, indicating starker pessimism among Brazilian consumers.
Similarly, the seasonally adjusted industrial business confidence index deteriorated again in August, falling to 90.4 (July: 94.8). August’s print, together with September 2023, was the lowest in five years. As such, the index moved further below the 100-point threshold, signaling deeper pessimism among industrial firms.
Outlook: Taken together, sentiment among industrial firms averaged below Q2 in July–August and remained in pessimistic territory; similarly, consumer sentiment averaged close to Q2’s level in the same two-month period and was also pessimistic. Accordingly, both readings bode ill for fixed investment and private consumption outturns in Q3; sentiment is likely suffering from stubbornly high inflation and near-two-decade high interest rates, as well as prospects that they will remain elevated for quite some time ahead. These factors are likely to keep a lid on sentiment in coming months.