industrial survey - amazon web services...industrial production edged down in september on a...

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The September issue of the Industrial Survey shows that industrial activity continues on its gradual upward trend. The main sign of this improvement comes from the decline in the percentage of entrepreneurs indicating lack of demand as the number one problem faced by companies – even though it ranks second among major problems – and from a slight indication of improvement in their financial conditions.

Due to seasonal factors, industrial production declined and capacity utilization remained stable in September as compared to August. However, the indices measuring employment and desired-usual inventory levels have improved. These are signs that the improvement in the labor market in the economy and the rise in total payroll have been reflected in

Demand conditions in the economy improve

INDUSTRIAL SURVEY

the increase in domestic demand, with a positive impact on industrial activity.

Expectations for the coming months remain positive, as all indices stand above the 50-point mark. Nevertheless, most indices show a small decrease in October on a month-over-month basis, indicating a slight slowdown in industrial entrepreneurs’ optimism. Companies’ investment intentions, on the other hand, recorded growth.

The improvement does not dispel concerns over a slow recovery, with current indicators still down from pre-recession figures. This scenario reinforces the need for continued efforts to implement structural reforms and improve the business environment with the aim of overcoming the barriers that limit the current rate of expansion.

30.0

32.0

34.0

36.0

38.0

40.0

42.0

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

44.0

Q32018

Q42018

Q12019

Q22019

41.8

38.2

40.4

39.0

36.6

34.7 34.5

30.3 30.631.1

37.5

41.1

34.6

Q32019

Importance of “insufficient domestic demand” among major problems faced by industry in the quarter Percentage of answers in the quarter (%)

ISSN 1676-0212 • Year 22 Number 9 • September 2019INDICATORSECONOMIC

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Industrial Survey ISSN 1676-0212 • Year 22 Number 9 • September 2019

INDICATORSECONOMIC

Seasonal decline in production in SeptemberIndustrial production edged down in September on a month-over-month basis, with the production index standing below the 50-point dividing line at 48.8 points, against 51.4 points in August. Production usually declines in the month, as shown in the graph below. It is worth highlighting that, despite the decline, the September index hit its highest level for the month since 2014, showing that the result was seasonal and less negative than in recent years.

The employment index in turn edged up by 0.4 points in the month to 49 points. The figure is in the same level as recorded in the last two years. The index is down by 0.2 points as compared to September 2018 and remained unchanged from the same month in 2017.

The capacity utilization rate hit the mark of 69% in September, standing at the same level as in August. This represents a 1-percentage point increase from September 2018, but the index remains far from average pre-crisis level. In September, capacity utilization is 5 points lower than the month’s average in the 2011-2014 period.

Capacity utilization holds steadyThe index measuring actual-usual capacity utilization remained below the 50-point dividing line as it fell by 1.2 points on a month-over-month basis to 42.9 points. Compared with September 2018, the index is up by 0.1 point.

52.6

49.1

47.1

50.2

49.7

42.0

48.1

45.8

47.2

48.8

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

50Increase

Decrease

PERFORMANCE OF INDUSTRY IN SEPTEMBER 2019

Production in September (2010-2019) Diffusion index (0-100 points)*

* Figures below 50 points indicate a month-over-month decrease in production.

Production Dividing line

3


INDICATORSECONOMIC

50.450

Increase/above

planned level

Decrease/below

planned level

AUG2018

SEP OCT NOV DEC JAN2019

FEB APR MAY JUNMAR JUL AUG SEP

50.6 50.550.7 50.7

48.4

46.6

48.9

50.9

50.2

48.9 50.2 50.8 51.1 51.5 50.1

51.2 51.2 51.2 51.350.8

50.2

51.151.6

52.252.8

51.7 51.4

After the decline in inventory levels in August, the inventory index increased by 0.3 points in September on a month-on-month basis, hitting the mark of 50.4 points and indicating a slight increase in inventory build-up. The index measuring actual-planned inventory levels in

Inventory remain slightly above usual levelturn dropped again, also by 0.3 points, to 51.4 points in September. This indicator shows that despite the partial adjustment, inventories are still excessive, as the indicator remains above the 50-point mark. Both indicators are at a similar level than they were in September 2018.

50

Abovethe usual

Bellowthe usual

SEP2014

MAR2015

SEP MAR2016

SEP MAR2017

SEP MAR2018

SEP SEPMAR2019

42.543.9

37.135.1

42.938.6

33.8

41.2

41.842.8

41.0

* Figures above 50 points indicate an increase in inventory levels or that actual inventory is above planned levels..

Inventory levels and actual-planned inventory levels Diffusion index (0-100 points)*

Evolution Dividing line Actual-planned

*Figures below 50 points indicate that actual capacity utilization is below usual levels.

Actual-usual capacity utilization Diffusion index (0-100 points)*

4


INDICATORSECONOMIC

Business financial conditions improved in the third quarter. The index measuring satisfaction with profits stood at 42.3 points, up by 2.2 points from the previous quarter, while the index of satisfaction

Entrepreneurs indicated that access to credit improved somewhat in the third quarter. The index grew to 40.4 points, up by 0.8 points from the figure registered in the second quarter of the year. Despite the increase, however, the index is below 50 points, indicating that entrepreneurs

Financial conditions improve

Less difficult access to credit

with financial situation amounted to 47.2 points, representing a 1.5-point increase. The latter indicator reached its highest level in the last three years, with the exception of the fourth quarter of 2017.

are still having a hard time accessing financial resources. The fact that the index increased above 40 points indicates an important improvement trend, as the indicator approached the readings registered in 2013, when it reached the 40-point mark for the last time.

50Easy

Difficult

Q32016

Q12017

Q32017

Q12018

Q32018

Q12019

Q32019

35.5

40.4

30.5

38.2

50Satisfaction

Dissatisfaction

Q32016

Q12017

Q32017

Q12018

Q32018

Q12019

Q32019

41.8 42.4 42.3

36.4

41.5

45.546.9 47.2

Ease of access to credit Diffusion index (0-100 points)*

Ease of access to credit

Dividing line

* Figures below 50 points indicate difficulties on access to credit.

FINANCIAL CONDITIONS OF INDUSTRY IN THE THIRD QUARTER OF 2019

Satisfaction with profits and financial situation Diffusion index (0-100 points)*

Financial situation

Profits

Dividing line

* Figures below 50 points indicate dissatisfaction with profit margins and financial conditions.

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INDICATORSECONOMIC

A high tax burden is still the number one problem faced by industrial companies, with the percentage of companies indicating this problem increasing by 2.3 percentage points from the previous quarter to 44.7%.

Insufficient domestic demand continued to rank second among major problems, as indicated by 34.6% of companies. However, its importance dropped by 6.5 percentage points from the last quarter. Considering the partial inventory adjustment observed in the last two months, this decline is explained by the recovery of retail trade.

Ranking third is the issue of lack of working capital, as indicated by 18.2% of respondents, representing a 1.8-percentage point increase over the previous quarter. Coming next is the problem of lack or high cost of raw materials, which experienced another decline in the percentage of responses.

A fact that stands out in the ranking was the increase in the percentage of companies indicating the issues of exchange rate and difficulties in transportation logistics, which increased by 3.2 percentage points.

Lack of demand loses importance

44.7

34.6

18.2

17.6

17.3

16.3

16.2

15.0

14.6

14.5

13.0

11.5

8.3

7.5

6.3

6.3

3.6

2.9

42.4

41.1

16.4

18.6

18.1

15.6

13.O

16.0

16.5

12.5

9.4

8.4

5.1

6.0

3.5

3.3

13.4

8.3

High tax burden

Insufficient domestic demand

Lack of working capital

Lack or high costs of raw materials

Unfair competition

Excessive red tape

Exchange rate

High interest rates

Client delinquency

Lack or high cost of energy

Insufficient foreign demand

Difficulties with transportation logistics

Lack of long-term funding

Competition with imported goods

Lack or high cost of skilled labor

Legal uncertainty

Other

None

PROBLEMS FACED BY INDUSTRY IN THE THIRD QUARTER OF 2019

Main problems faced by industry in the third quarter of 2019 Percentage (%)

Q3 2019 Q2 2019

In the survey, entrepreneurs are asked to indicate up to three items representing the main problems faced by their companies, so the sum of the percentages exceeds 100%.

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INDICATORSECONOMIC

50

Increase

Decrease

2018OCT DEC FEB

2019APR JUN AUG OCT

57.7

60.8

54.3

58.8

57.3

58.3

56.7

All expectation indices remained above 50 points in October, meaning they show positive prospects for the next six months. Compared to September, however, the indices are slightly down, except for the index of expected export volumes, which posted growth of 0.9 points and reached 52.5

Expectations remain favorable points. Expectations for demand grew by one point from September to 56.7 points, while expectations about purchases of raw materials dropped by 0.7 points to 54.2 points and expectations about number of employees fell by half a point.

50

Increase

Decrease

54.6 54.252.4

55.3

58.9

56.1

OCT DEC FEB2019

APR JUN AUG OCT2018

55.8

50

Increase

Decrease

49.1

51.750.2

OCT DEC FEB2019

APR JUN AUG OCT2018

51.7

53.7

50.8 50.8

OCT DEC FEB2019

APR JUN AUG OCT2018

50

Increase

Decrease

52.252.6

52.551.953.2

54.3 54.1

Demand Purchases of inputs and raw materials

Number of employees Exports

Expectations indicesDiffusion indices (0-100 points)*

Expected demand Dividing line Expected purchases of inputs and raw materials Dividing line

Expected number of employees Dividing line Expected exports Dividing line

* Figures above 50 points indicate an expected growth.

INDUSTRY’S EXPECTATIONS IN OCTOBER 2019

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INDICATORSECONOMIC

TOTAL SMALL MEDIUM LARGE

Q2 2019 Q3 2019 Q2 2019 Q3 2019 Q2 2019 Q3 2019 Q2 2019 Q3 2019

ITEMS % % Ranking % % Ranking % % Ranking % % Ranking

High tax burden 42.4 44.7 1 44.5 42.2 1 44.2 48.3 1 40.4 44.0 1

Insufficient domestic demand 41.1 34.6 2 35.8 30.6 2 42.0 34.3 2 43.2 36.8 2

Lack of working capital 16.4 18.2 3 19.9 22.4 4 20.9 20.8 3 12.3 14.7 7

Lack or high costs of raw materials 18.6 17.6 4 18.4 20.0 6 19.3 19.0 4 18.3 15.7 6

Unfair competition 18.1 17.3 5 26.8 27.1 3 19.6 17.7 5 13.0 12.3 10

Excessive red tape 15.6 16.3 6 14.0 14.9 9 15.5 16.4 7 16.4 17.0 5

Exchange rate 13.0 16.2 7 5.1 6.1 15 7.1 15.4 8 19.9 21.7 3

High interest rates 16.0 15.0 8 17.3 18.9 8 17.7 15.1 9 14.4 13.0 9

Client delinquency 16.5 14.6 9 20.5 19.3 7 16.7 14.8 10 14.4 12.1 11

Lack or high cost of energy 12.5 14.5 10 18.4 20.3 5 14.7 17.3 6 8.4 10.2 12

Insufficient foreign demand 13.4 13.0 11 7.8 7.8 12 10.1 9.6 13 18.0 17.4 4

Difficulties with transportation logistics 8.3 11.5 12 6.5 7.5 13 8.9 10.6 11 8.9 14.0 8

Lack of long-term funding 9.4 8.3 13 7.1 9.1 11 12.2 10.2 12 9.1 7.0 15

Competition with imported goods 8.4 7.5 14 4.0 6.8 14 7.2 8.9 14 11.2 7.2 13

Lack or high cost of skilled labor 5.1 6.3 15 11.0 11.2 10 4.6 7.0 15 2.5 3.6 16

Legal uncertainty 6.0 6.3 15 4.0 3.9 16 5.8 6.7 16 7.1 7.2 13

Other 3.5 3.6 - 3.0 3.4 - 3.0 3.6 - 4.1 3.6 -

None 3.3 2.9 - 5.1 3.2 - 3.0 2.5 - 2.5 3.0 -

The investment intentions index increased by 0.6 points in October, remaining at a relatively high level. As a result, entrepreneurs’ investment intentions offset September’s decline and returned to the level registered in August, standing at 54.5 points. The indicator is up by 3.2 points from the figure observed in May 2018 and by 4.8 points from its historical average.

Investment intentions increase

52.1

40

45

50

55

60

OCT2014

OCT OCTJUN JUNFEB2015

FEB2016

FEB2017

OCTJUN FEB2018

OCTJUN OCTJUNFEB2019

40.7

49.6 50.9

43.5

54.1

* The higher the index, the more likely industry is to invest.

Investment intentions Diffusion indices (0-100 points)*

RESULTS

Main problems

Note: In the survey, entrepreneurs are asked to indicate up to three items representing the main problems faced by their companies, so the sum of percentages exceeds 100%.

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INDICATORSECONOMIC

PRODUCTION EVOLUTION

NUMBER OF EMPLOYEESEVOLUTION

CAPACITYUTILIZATION (%)

ACTUAL-USUALCAPACITY

UTILIZATION

INVENTORIES LEVELS

EVOLUTION

ACTUAL-PLANNEDINVENTORIES

Sep/18 Aug/19 Sep/19 Sep/18 Aug/19 Sep/19 Sep/18 Aug/19 Sep/19 Sep/18 Aug/19 Sep/19 Sep/18 Aug/19 Sep/19 Sep/18 Aug/19 Sep/19

Total 47.2 51.4 48.8 49.2 48.6 49.0 68 69 69 42.8 44.1 42.9 50.6 50.1 50.4 51.2 51.7 51.4

BY INDUSTRIAL ACTIVITY

Mining andquarrying 51.4 52.8 54.0 52.4 50.4 50.0 75 74 76 48.3 44.9 47.9 42.7 47.8 51.2 44.7 52.8 50.0

Manufacturing 47.0 51.3 48.6 49.1 48.5 49.0 68 69 69 42.5 44.0 42.7 50.9 50.2 50.5 51.4 51.6 51.5

BY COMPANY SIZE

Small1 47.4 48.8 48.4 47.7 48.1 48.4 60 61 62 41.9 43.0 42.5 47.7 48.1 48.8 46.5 46.9 47.5

Medium2 46.9 51.0 48.3 49.0 49.5 48.7 66 68 68 41.4 43.9 41.6 50.2 50.1 49.5 49.6 50.6 49.3

Large3 47.2 52.9 49.2 50.1 48.3 49.5 73 73 74 43.9 44.7 43.7 52.3 51.1 51.7 54.3 54.6 54.5

Performance of industry

PROFITS AVERAGE PRICE OF RAWMATERIALS FINANCIAL SITUATION ACCESS TO CREDIT

Q3 2018 Q2 2019 Q3 2019 Q3 2018 Q2 2019 Q3 2019 Q3 2018 Q2 2019 Q3 2019 Q3 2018 Q2 2019 Q3 2019

Total 42.4 40.1 42.3 68.8 58.3 57.2 46.9 45.7 47.2 38.2 39.6 40.4


Mining andquarrying 48.9 46.2 44.8 63.1 59.7 55.1 50.7 47.0 48.1 40.9 48.6 46.1

Manufacturing 42.1 39.8 42.2 69.1 58.3 57.2 46.8 45.6 47.1 38.1 39.4 40.2

BY COMPANY SIZE

Small1 37.7 35.8 38.8 68.6 59.6 59.2 40.9 39.5 41.5 33.7 35.3 36.0

Medium2 39.5 37.5 39.3 69.7 58.5 58.1 43.5 42.6 45.6 35.3 38.7 39.3

Large3 46.2 43.5 45.7 68.5 57.6 55.7 51.7 50.4 50.9 41.9 42.2 43.2

The indicators vary in the 0-100 interval. Figures above 50 points suggest a positive evolution, higher-than-planned inventories or higher-than-usual capacity utilization.1 - Company with 10-49 employees. 2 - Company with 50-249 employees. 3 - Company with 250-plus employees.

Financial conditions in the quarter

The indicators range in the 0-100 interval. Figures above 50 indicate satisfaction with profit margins and financial conditions, easier access to credit, or an increase in the average price of raw materials. 1 - Company with 10-49 employees. 2 - Company with 50-249 employees. 3 - Company with 250-plus employees.


INDICATORSECONOMIC

DEMAND EXPORTS VOLUMES PURCHASES OF RAWMATERIALS

NUMBER OF EMPLOYEES

INVESTMENT INTENTIONS*

Oct/18 Sep/19 Oct/19 Oct/18 Sep/19 Oct/19 Oct/18 Sep/19 Oct/19 Oct/18 Sep/19 Oct/19 Oct/18 Sep/19 Oct/19

Total 54.3 57.7 56.7 53.3 51.6 52.5 52.4 54.9 54.2 49.1 50.7 50.2 50.9 53.5 54.1


Mining andquarrying 51.1 55.6 51.8 52.1 54.7 52.7 51.4 52.6 51.2 50.2 53.1 49.2 59.9 59.8 59.3

Manufacturing 54.5 57.8 56.9 53.2 51.6 52.6 52.5 55.0 54.4 49.1 50.7 50.3 50.6 53.2 53.8

BY COMPANY SIZE

Small1 52.9 57.6 56.7 51.7 49.2 49.4 51.5 55.5 54.6 48.7 51.5 50.1 39.7 42.9 42.0

Medium2 54.3 57.7 57.9 52.6 54.0 54.1 52.8 54.9 56.0 49.4 50.7 51.5 45.6 51.6 53.3

Large3 55.0 57.8 56.0 54.4 51.6 53.3 52.6 54.6 53.1 49.2 50.3 49.6 59.3 59.8 60.5

iiTechnical specificationsSample profile: 1,962 enterprises, including 803 small, 689 medium and 470 large companies. Data collection period: October 1-11, 2019.

Learn moreFor more information on the survey, including historical series and methodology, kindly visit: www.cni.com.br/e_sondindustrial

INDUSTRIAL SURVEY | English version of “Sondagem Industrial Setembro 2019” | Monthly Publication of the National Confederation of Industry - CNI | www.cni.com.br | Industrial Development Board - DDI | Economic Policy Unit - PEC | Executive manager: Flávio Castelo Branco | Research and Competitiveness Unit - GPC | Executive manager: Renato da Fonseca | Statistics Unit | Manager: Edson Velloso | Analysis: Marcelo Souza Azevedo and Isabel Mendes de Faria | Team: Aretha Silicia Lopez Soares, Roxana Rossy Campos and João Pedro Fontoura da Silva (intern) | Editing Unit | Coordinator: Carla Gadelha | Graphic design: Simone Marcia Broch | Subscriptions: Customer Service - Phone: +55 (61) 3317-9992 – email: [email protected] | This publication may be copied, provided that the source is mentioned.

Industrial expectations

The indicators vary in the 0-100 interval. Figures above 50 points indicate positive expectations. * The indicator varies in the 0-100 interval. The higher the index, the more likely industry is to invest. 1 - Company with 10 to 49 employees. 2 - Company with 50-249 employees. 3 - Company with 250-plus employees.

http://www.portaldaindustria.com.br/statistics/industrial-survey/

industrial survey - amazon web services...industrial production edged down in september on a...

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