Rising costs and working capital at the limit bring down optimism among small industrialists in São Paulo

São Paulo’s micro and small industries are less optimistic about the future at the end of this year. Those who believe that business will improve in the coming months fell from 54% to 38%, according to a Datafolha survey for the union that represents the sector.

Among the pessimists, those who see conditions for a deterioration in production and sales, there was an increase from 9% to 14%.

The survey carried out for Simpi (Union of Micro and Small Industries of the State of São Paulo) shows that for 54% of entrepreneurs “the crisis is still strong, it affects business a lot, and it is not possible to predict how much the economy will grow again” .

For 42%, the crisis is weaker, but it still affects business. Only 3% said they no longer felt the effects of the crisis on business.

The cash position of small industries is not good either. When asked about the condition of their working capital reserves, 43% said the money is either insufficient or too little. For 46%, the capital is just enough to keep the operation going. Only 10% said they had more than enough money.

For Simpi, the tight accounts justify the increase in the search for credit. Overdraft usage increased from 12% in October to 17% in November. The contracting of loans was the solution found by 11$% of micro and small industrialists in São Paulo.

In a statement, the president of Simpi, Joseph Couri, says that the survey points to another period of retraction in business, contrary to expectations of an increase in demand due to the end of the year. For him, the threat of a new wave of contamination by Covid-19, with the discovery of the omicron attention variant, has affected the economy and directly reflected most production segments.

“The search for credit and the drop in optimism among entrepreneurs show a crisis that is still strong and far from over for micro and small industries. Contrary to what was expected, the end of the year will not bring relief to the accounts for companies, compromising the cash flow and, consequently, the generation of employment and income, in addition to further reducing people’s purchasing power and raising inflation.”

Simpi’s activity indicator is done monthly by Datafolha. According to the union, 42% of Brazilian micro and small industries are located in São Paulo.