Industry confidence rises in August, driven by falling costs, says FGV

The Industry Confidence Index (ICI) increased by 0.8 percentage point in August, to 100.3 points, announced the Brazilian Institute of Economics, from Fundação Getúlio Vargas (FGV Ibre) this Monday (29).

The result is above the sector’s neutrality level, considered by the institution at 100 points, after being at 99.5 in July.

The high indicates that the sector maintains a good level of activity in the third quarter, the institution said in a note. In the quarterly moving averages metric, the index also advances, by 0.2 point.

“The improvement in the business environment in the month was possibly influenced by the decompression of costs with the drop in fuel and energy prices”, he says.

The institution reinforces that, despite the “still problematic scenario” regarding the supply of some types of inputs, demand levels are still positive and inventories remain balanced.

“This favorable picture is reflected in the still favorable forecasts for the evolution of employment in the sector in the three months. In the other items that measure expectations for the near future, there is some caution on the part of businessmen in the face of a second semester of elections and maintenance of higher interest rates”, says Stéfano Pacini, economist at FGV/Ibre.

The survey registered a rise in confidence in August in 9 of the 19 monitored industrial segments.

The Current Situation Index (ISA) advanced 1.4 points to 102.8 points, and the Expectations Index (IE) rose 0.3 points to 97.9 points.

Among the items that make up the ISA, the best performance comes from the indicator that measures the level of inventories, indicating more balance in this segment.

The indicators that measure the perception of entrepreneurs in relation to the current situation of the business and the degree of satisfaction of the companies with the level of demand rose 0.6 and 0.4 points, to 101.7 and 103.2 points, respectively, he says. the FGV.

“Among expectations, the business trend indicator for the following six months was the one that most influenced the rise in IE in August, rising 3.0 points to 96.9 points, despite this, it remains at a low level at levels history,” he says.

The indicator that measures optimism with the evolution of physical production in the following three months dropped 3 points, to 92.1 points, the lowest result since March 2022 (90.3 points).

The employment expectations indicator for the next three months rose 0.7 point to 104.6 points. “This is the best result for the employment indicator since October 2021 (108.1 points)”, says FGV.