Brazilian Industry Grows Across the Board with Ethanol in the Lead

Volkswagen assembly line in Brazil Industrial activity in the second quarter of 2007 reached the largest level in the last two years, according to the Manufacturing Indicators study, disclosed by the National Confederation of Industries (CNI), in Brazilian capital BrasÀ­lia.

The indicator reached 56.2 points, 5.1 points above the previous quarter and 7.2 points above the same period last year. The study was executed between June 29th and July 18th, and included 258 large companies, 507 medium and 949 small.

An important tendency verified in the current study is the widespread recovery of industrial figures among the sectors. Different from what has been taking place in recent years, the growth of industry has reached most sectors.

Of the 27 sectors researched, 21 presented values above 50 points in the production index, which, according to the methodology, means growth. In the second quarter of the year, just eight sectors had production levels above 50 points.

The sectors with the greatest indices in the evolution of production in the second quarter of this year were alcohol (71.4 points), oil refining (68.8 points) and self-propelled vehicles (64.4 points).

On the opposite side, of the five sectors that registered reduction in production, the greatest drawbacks came from shoes (44.6 points), wood (45.5 points) and leather and artefacts (45.8 points). The furniture sector was the only one that registered stability in production.

Large companies continue powering the recovery of industrial activity, with a level of productive expansion of 58.3 points. However, medium and small companies also presented significant improvement in expansion of production (56.9 points and 52.6 points, respectively).

For comparison, the index of evolution per size of industry in the second half was 44.6 points for small industries – showing a strong retraction in production – 49.3 points for the medium ones and 52.1 pints for large enterprises.

Employment

Industrial employment expanded in the second quarter of this year: the level of growth in the number of employees was 52.6 points. This is the greatest expansion in two years. The recovery in occupation was greatest in large industries (53.5 points) followed by medium (53.1 points), and then small industries, whose level of employment remained practically stable (50.8 points).

The level of expected number of employees shows a good moment for industrial employment. This is the second half running in which companies expect their number of employees to rise. The index rose from 52.4 points to 53.2 points, showing expansion in the expected number of people to be taken on.

It must also be pointed out that the expected growth in industrial employment in the first quarter came true (as shown by the index of evolution of employment in the quarter) so the expected growth will be based on a larger base of employees.

The indices of expectations for the coming six months show that the optimism registered in the first quarter remains. Except for foreign sales, expectations are positive, with employees expecting growth in sales and forecasting expansion in the purchases of raw materials and in the hiring of employees.

It is clear that this optimism is due to the forecasted evolution in demand on the domestic market, as the export expectation index shows a reduction in coming months.

The forecasted expansion of demand for the coming six months is also optimistic. The level in the second quarter remained constant in comparison to the first quarter (60.7 points, against 60.6 points in the first quarter) and well above the line dividing the forecasted growth and reduction in demand.

Although the optimistic evaluation is still being shared by industries of all sizes, medium companies have registered a reduction in the index (1.2 points, to 60.4 pints), whereas the indices for small and large companies registered growth (to 59.4 and 62 points, respectively).

CNI

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