Industrial production grows 7% in May after 2 months of pandemic decline

Brazilian industrial production advanced 7% in May, compared to April, as reported on Thursday (2) the Brazilian Institute of Geography and Statistics (IBGE). The high comes after two straight months of decline and a record drop in April (-18.8%).
Although it was the highest increase ever recorded by the survey for a month in May, the advance eliminated only part of the losses accumulated since the beginning of the coronavirus pandemic.
"Growth, however, was insufficient to reverse the 26.3% drop accumulated in March and April. With this, the sector reaches the second lowest level since the beginning of the historical series of the Monthly Industrial Survey, and the lowest level was recorded in April of this year", reported IBGE.
Compared to May 2019, there was a drop of 21.9%, the seventh negative result followed in this type of comparison and the second highest drop since the beginning of the historical series, behind only the April result (-27.3%).
In the year, the industry accumulated a drop of 11.2%. In 12 months, the decrease is 5.4%, the most intense since December 2016 (-6.4%).
With the slight recovery in May, the level of Brazilian industrial production is 34.1% below its historic peak, reached in May 2011.
"As of the last third of March, several industrial plants were closed, and in April, some were virtually without production all month, culminating in the industry's worst result in the historical series of the survey.
The month of May already shows some kind of return to production, but the expansion of 7%, despite being the highest since June 2018 (12.9%), is mainly due to a very low comparison base", explained André Macedo, research manager.
Among the activity segments, the growth compared to the previous month was generalized, reaching all major economic categories and rising in 20 of the 26 branches surveyed.
"The activities were driven, to a large extent, by the return to production (even if partially) of production units, after the interruptions of production occurred in several production units, due to the effect of the pandemic," Macedo said.
The most relevant positive influence was marked by motor vehicles, trailers and bodies (244.4%), which interrupted two consecutive months of drop in production and marked the sharpest expansion since the beginning of the research series, but is still 72.8% below the level of February.
Other positive highlights were the segments of coke, petroleum products and biofuels (16.2%), which returned to growth after accumulating a loss of 20.0% in three consecutive months of negative rates, and beverages (65.6%), which eliminated part of the 49.6% reduction accumulated in March and April 2020.
Among the activities that remained in the red in May, highlight for extractive industries (-5.6%), pulp, paper and paper products (-6.4%) and perfumery, soaps, cleaning and personal care products (-6%).
Among the major economic categories, still compared to April, the greatest advances were in the production of durable consumer goods (92.5%) and capital goods (28.7%), with both interrupting two straight months of decline and marking the highest highs since the beginning of their historical series. Despite the high positive results, the segments are also well below the Level of February: -69.5% and -36.1%, respectively.
-durable consumer goods: 92.5%
-capital goods: 28.7%
-semi- and non-durable consumer goods: 8.4%
-intermediate goods: 5.2%
The analysts' assessment is that the worst of the crisis may have already fallen behind, but the recovery of losses is expected to take place very gradually amid the impacts of the coronavirus pandemic on the Brazilian and world economy.
In June, industry confidence increased 16.2 points in June, reaching 77.6 points, according to fgv's indicator. Despite the second consecutive high, the index recovered only half of the 39.3 points lost between March and April.
The Economic Cycles Dating Committee (Codace), of the Getulio Vargas Foundation (FGV), assesses that Brazil went into recession in the first quarter, without having recovered all the losses from the 2014-2016 recession.
The Central Bank's most recent Focus survey shows that the market expects a 6.54% decline for the Brazilian economy this year, going up 3.50% in 2021.
The International Monetary Fund (IMF) projects that the Brazilian economy will shrink 9.1% this year. If forecasts are confirmed, the fall in the Brazilian economy is expected to be the largest in at least 120 years.