Brazil & Southern Cone - November 2015 (ISSN 1741-4431)
ECONOMY: Industrial production falls the most since 2009
With indicators still continuing to deteriorate, any green shoots appear very far away.
The index of industrial production (IP) fell by 10.9% year-on-year in September, according to the national statistics institute (Ibge,) the biggest fall since April 2009 (-14.1%.). Industrial output has now fallen for 19 consecutive months, with an accumulated fall of 7.4% in the first nine months of this year. The 12-month rolling rate, which fell by 6.5% in the period ending in September, registered its worst result since December 2009 (-7.1%)
As the table below indicates, there is little positive to find anywhere in the data, with capital goods output in particular continuing to register steep falls as the key auto sector, which accounts for about a fifth of the country’s industrial park, remains in the doldrums. This is heavily weighing on the headline figure but the picture is no better in other categories and is indicative of the depths of Brazil’s recession now. The local consensus is now for a full year contraction of 7.4% in industrial output, followed by another contraction of 2% next year.
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Index of Industrial Production |
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Categories |
% change |
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|
|
September 2015/ August 2015 |
September 2015/ August 2015 |
Accumulated January- September |
Accumulated past 12 months |
|
Capital goods |
1.0 |
-31.7 |
-23.6 |
-20.4 |
|
Intermediate goods |
-1.3 |
-7.2 |
-4.1 |
-3.9 |
|
Consumer goods |
-1.2 |
-12.1 |
-9.1 |
-7.5 |
|
of which: durable |
-5.3 |
-27.8 |
-15.7 |
-13.9 |
|
Semidurable and non- durable |
0.5 |
-7.4 |
-7.1 |
-5.6 |
|
General Industry |
-1.3 |
-10.9 |
-7.4 |
-6.5 |
|
Source: IBGE |
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Layoffs continue
The metropolitan unemployment rate in September was 7.6%, up from 4.9% a year earlier. There are now almost 2m people unemployed, on official data (the true figure is likely higher). The unemployed population rose by 57% between September 2014 and September 2015, meaning that 670,000 more people are out of work/looking for work. Average earnings are also down, with workers taking home 4.3% less in September compared to a year ago, with earnings of R$2,179, compared to R$2,279 12 months ago.
Monica de Bolle, visiting fellow at the Washington-based Peterson Institute of International Economics, expects unemployment to reach close to double digits within the next six to nine months. “I don’t think the situation has any chance of reversing right now. If the government manages to overcome its deadlock, the situation could turn stable by the second half of 2016, but the gloom would likely continue until then.”