Itaú BBA - Stable industrial production in January and February

Macro Brazil

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Stable industrial production in January and February

April 4, 2017

Breakdown shows a better picture than the headline reading

Industrial production rose 0.1% in February, below the median of market expectations(0.7%) and close to our call (0.2%). The index was virtually stable in January and February after a strong increase in December, ensuring quarterly expansion and reinforcing the outlook for GDP growth in 1Q17.

Breakdown shows a better picture than the headline reading 

Industrial production went up slightly by 0.1% mom/sa in February, close to our forecast (0.2%) and below market estimates (0.7%). The monthly indicator fell 0.8% yoy.

The breakdown shows a better picture than the stagnation in the seasonally-adjusted aggregate reading, with strength in less volatile components, gains in more than half of economic activities and strong performances by durable consumer goods and capital goods segments.

Breaking down by activity, manufacturing climbed 0.4%, while extraction and mining (more affected in the short run by exogenous factors) contracted 0.5% mom/sa. On a more detailed breakdown, 13 out of 24 activities posted monthly gains, with machinery and automobiles standing out (check out the heat map at the bottom of this report).

The breakdown by economic category shows substantial expansion in the production of durable consumer goods (7.1%) and capital goods (6.5%), a slight gain in intermediate goods (0.5%), and a decline in semi-durable and non-durable consumer goods (-1.6%). The weighted sum of seasonally-adjusted advances outlines expansion, unlike the aggregate result.

Construction materialproductionfell 0.2% after three consecutive monthly increases.

Coincident indicators point to a decline in March, but sustaining the quarterly gain

Available coincident indicators (capacity utilization, vehicle sales, weekly foreign trade figures, power consumption) point to a slight decline in industrial production in March. Our preliminary forecast is -0.4% mom/sa, consistent with a quarterly change of +1.5% in 1Q17 (thanks to a strong gain in December 2016), reinforcing our outlook for economic growth in the quarter.

The heat map below shows a better picture than in the previous quarter. For the full methodology, please refer to our Industrial Production Heat Map 


 

Artur Manoel Passos

 

 



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