The Industry Confidence Index (ICI), calculated by the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV/Ibre), registered a drop of 0.2 points in January and remained relatively stable, moving to 93.1 points. In quarterly moving averages, the retreat is 0.9 points, the worst result since August 2020, when it reached 88.7 points. In the month, 11 of the 19 industrial segments monitored by the Survey registered an increase in confidence. The Current Situation Index (ISA) dropped 0.7 points to 93.1 points. The Expectations Index (IE) was up 0.4 points and reached 93.2 points.
According to the survey, among the items that make up the ISA, the indicator that measures the perception of entrepreneurs in relation to the current business situation was the one that most contributed to the drop in the ICI in the month. The indicator retreated 1.6 points and reached 90.9 points. There was also a drop in demand and an increase in the level of inventories 1 in the period, with variations of 0.2 and 0.5 points, to 91.9 and 103.0 points, respectively. This indicator above 100 points means that the industry is operating with excessive inventories or above the desirable level.
Prospects
On the contrary, in terms of future expectations, the business trend for the next six months, by advancing 2.4 points to 91.9 points, prevented a sharper drop in confidence in January, even though it has been below 100 points since September 2021, when it reached 102.7 points.
In a shorter period, for three months, after four consecutive months of decline, the perspectives on employment gained 0.5 points, to 95.6 points. Even so, the indicator remains below 100 points, “still signaling a slowdown in hiring in the coming months”. The indicator that measures perspectives on production for the next three months dropped 1.6 points to 92.5 points.
The Industry Installed Capacity Utilization Level fell by 0.8 percentage points to 78.8%. It is the worst result since May 2021. That month it reached 77.8%.
For the economist at FGV/Ibre, Stefano Pacini, 2023 begins with accommodation in the confidence of industrial entrepreneurs. According to Pacini, in the assessments of the current situation, there is a perception of a further weakening of demand which is reflected in an increase in the level of inventories.
“With regard to perceptions of the future, entrepreneurs project an improvement in the business trend generated by some reaction in demand and some recovery in hiring, but which need to be evaluated with caution considering the low level of the indicators. Even with less pessimistic results, this would not reflect an improvement in production in the coming months, which may be related to the level of inventories”, he noted.
