Analysts at Rabobank note that in June, Brazil’s industrial production (IP) pays back to May’s slump on fading effects of the truckers’ strike as the headline jumped 13.1% m/m (+3.5% y/y), recovering from a nosedive of 11.0% m/m (-6.5% y/y).
Key Quotes
“The details show that the June rebound was across the board, as Brazilian manufacturers got back in business. Yet trend growth is weakening in all industrial segments.”
“The zigzagging in Q2 also shook our high-frequency proxies for aggregate investment: we calculate a 7.7% m/m rebound in June from a 10.1% m/m tumble in May.”
“While June IP data confirm (ex-ante) expectations that the immediate effects from the truckers’ strike would be temporary, this recovery does not sufficient to spare the industry (supply-side) and investment (demand-side) from a sequential contraction in Q2.”
“And with other sectors also affected (e.g. services), the broad economy may probably take a step back as well. We look for a -0.1% q/q reading for IBGE’s official Q2 GDP release.”
“High political uncertainty, lower economic confidence, worse financial conditions, all could weigh on the sequential pace of recovery in H2, so that downside risks still loom our full-2018 GDP projection (currently at +1.3%; 2017: +1.0%).”
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