Brazil: Industrial activity declines for first time in ten months in February
April 1, 2021
Industrial output dropped 0.7% in month-on-month seasonally-adjusted terms in February, which contrasted January's 0.4% increase and marked the first decline since April 2020. February’s result surprised market analysts, who had expected a 0.4% expansion.
Looking at the details of the release, capital and consumer goods output swung to contraction. Moreover, durable consumer goods production dropped at a sharper rate compared to the previous month, while non-durable consumer goods production tipped into contraction.
On an annual basis, factory output rose at a more moderate pace of 0.4% in February (January: +2.3% yoy). Meanwhile, the trend improved, with the annual average variation of industrial production coming in at minus 4.1% in February, up from January's minus 4.2% reading.
Commenting on the outlook, Alberto Ramos, economist at Goldman Sachs, reflected:
“The near term outlook for IP is challenging given the acceleration of inflation, record number of covid cases/fatalities, renewed social distancing and mobility-limiting protocols, and supply chain issues.”
Author: Hanna Andersson, Economist