Industry confidence in Brazil has slight recovery in May, says FGV

Industry confidence in Brazil rebounded slightly in May, but the high does not yet compensate for the heavy losses recorded between February and April in the face of the consequences of the coronavirus pandemic, the Getulio Vargas Foundation (FGV) said on Wednesday. The Industry Confidence Index (ICI) rose 3.2 points in May to 61.4 points, the second lowest in the historical series. By April, the index had touched a record low of 58.2 points. According to FGV, the May reading represents a recovery of only 7.4% in relation to the drop of 43.2 points observed between February and April of this year. "The May Industry Survey signals accommodation of the current situation at very low levels and some calibration of expectations for the coming months," Renata de Mello Franco, an economist at FGV-Ibre, said in a statement. "(...) It's too early to conclude if the worst moment of the crisis is behind us. For the coming months, the high level of uncertainty and pessimism about the future may call into account a more consistent recovery of confidence." The Expectations Index (EI) - which measures entrepreneurs' perceptions of the future of the industry - rose 5.3 points this month to 54.9 points. The Current Situation Index (ISA), in turn, rose only 1.2 points to 68.6 points. Both indexes showed a slight recovery from historical lows. The biggest contribution to IE in May came from improving entrepreneurs' expectations on production over the next three months. The poor performance of the ISA is the result of the combination of better levels of inventories, the stability of the degree of satisfaction of entrepreneurs with the current business situation and the worsening of the assessment of current demand.