Industrial production rises 3.9% in 2021, but does not return to pre-pandemic level

After two years of decline, Brazilian industrial production started to grow again, with an increase of 3.9% in the accumulated of 2021, informed this Wednesday (2) the IBGE (Brazilian Institute of Geography and Statistics).

The result, however, is largely associated with a weakened basis for comparison. In 2020, In the initial year of the pandemic, the indicator had fallen by 4.5%, after falling 1.1% in 2019.

Even with the positive result in 2021, the highest since 2010 (10.2%), factory production was unable to recover the pre-coronavirus level.

In December, it was 0.9% lower than in February 2020. It is also 17.7% below the record set in May 2011.

In the monthly cut, industrial production rose 2.9% in December, compared to November 2021, pointed out the IBGE. The rise came after stagnation (0%) in the previous month, which interrupted a sequence of five previous declines.

December’s performance surprised the financial market, as it came in well above estimates. Analysts consulted by the Bloomberg agency projected an increase of 1.6% compared to November.

André Macedo, IBGE research manager, said that the robust growth brings a positive signal to the industrial sector. The result, however, is also closely associated with the weakened basis of comparison, evaluated the technician.

This Wednesday, the IBGE also reported that, in relation to December 2020, factory production fell by 5%. In this cut, analysts’ estimates signaled a greater retraction, of 5.9%.

Macedo recalled that, even with the high accumulated in 2021, the industry began to show signs of loss of breath throughout the year.

“In 2021, there was a decreasing characteristic throughout the year, since there was an accumulated gain of 13% in the first half, and, later, the industrial sector showed a reduction of breath”, he said.

In the second half, production fell by 3.4%. “The positive results of the first months of the year were related to a very depreciated basis of comparison, since in 2020 there were very intense losses for the industry”, indicated Macedo.

In the 12-month period of 2021, factory production had positive results in 18 of the 26 activities investigated by the IBGE.

The highlights came from automotive vehicles, trailers and bodies (20.3%), machinery and equipment (24.1%) and metallurgy (15.4%).

“It is a year in which the industry grows over a period of great loss. This is also a characteristic of the activity of motor vehicles, which, in 2020, had accumulated in the year of -27.9%”, said Macedo.

“So, it follows the same behavior as the general industry: it grows and stays in the positive field, although it has not reversed the losses of the previous year”, he amended.

bottlenecks

The shortage of inputs is still identified as a problem that affects part of the factories. The lack of components is associated with the pandemic, which has misaligned global production chains. Vehicle manufacturers, for example, came to paralyze production lines due to the frame.

The shortage of inputs has been accompanied by rising prices. In 2021, the inflation of goods used by the industry accumulated a high of 28.39%, according to the IPP (Producer Price Index).

The advance was the largest ever recorded in the historical series, which began in 2014. The IPP, another IBGE indicator, measures the variation in prices at the entrance of factories, without the effect of taxes and freight.

Analysts consider that the escalation of inflation for the Brazilian consumer and falling labor income also represent an obstacle to the recovery of factories. Together, the two factors make it difficult for families to purchase industrial goods.

“There are reflexes of the pandemic on the production process, such as higher production costs and lack of raw materials, and also, on the domestic demand side, inflation at higher levels and the job market that, although it has shown some degree of recovery, is still very much characterized by the precariousness of employment conditions, with lower wages”, pointed out Macedo.

In comparison with November, the 2.9% expansion of the general industry was driven by motor vehicles, trailers and bodies. The segment rose 12.2% in December. It was the fourth consecutive month of growth — a period with a cumulative gain of 17.4%.

Another positive contribution in December came from the activity of food products, which rose 2.9%. The advance is mainly due to the production of sugar and the return of beef exports to China, says the IBGE.

Majority below pre-crisis

Most industrial activities are still below pre-pandemic. In December 2021, 16 of the 26 surveyed were operating at a lower level than in February 2020.

The furthest from pre-crisis is maintenance, repair and installation of machinery and equipment. Activity was 24.9% below pre-pandemic.

Next, furniture and clothing items appear, 17.8% and 16.9% apart from February 2020.

The extractive industry is the only one that is at the same level as the pre-pandemic. The other nine activities analyzed are above.

In this case, the highlight goes to the production of machinery and equipment, which operated, in December, 16.5% above the pre-crisis level.

According to Macedo, the sale of goods aimed at the agricultural sector pulled the positive result of the segment. There was also a positive impact from the production of equipment for civil construction, said the IBGE analyst.