In July, business confidence in the Brazilian industrial sector hit its lowest level since the height of the Covid-19 pandemic. The Industrial Business Confidence Index (ICEI) fell 2.3 points from 46.7 in June to 44.4, according to a survey released on Monday the 13th by the National Confederation of Industry (CNI).
With this result, the indicator has remained below the 50-point threshold, which separates confidence from distrust, for 19 consecutive months. This is the second-longest streak of pessimism in the historical series, surpassed only by the economic recession between 2015 and 2016.
Prolonged pessimism
According to the head of the institution’s Economic Analysis, Marcelo Azevedo, the persistence of pessimism tends to slow down the pace of production, curb investments and affect the job market.
“Such a prolonged period of pessimism translates into a reduction in employment, production, or even the cancellation of productive investments,” Azevedo said in a statement.
Expectations are down
The two components that make up the ICEI recorded a decline in July.
The Current Conditions Index fell by 0.7 points to 41.6 points, indicating that entrepreneurs believe the business environment and the economy are worse than six months ago..
External context
According to the CNI, the worsening of expectations is linked to the increase in uncertainties on the international scene.
Among the factors cited are the worsening conflicts in the Middle East and the possibility of a resumption of US tariffs on Brazilian products, factors that have increased the perception of risk among entrepreneurs.
“The worsening of expectations is likely due to increased uncertainty in the external environment, both the escalation of the war in the Middle East and the possible reintroduction of US tariffs on Brazilian products,” Marcelo Azevedo assessed.
How it works
The ICEI ranges from zero to 100 points. Scores below 50 indicate a lack of confidence among industrial entrepreneurs, while scores above that threshold signal confidence.
For the July edition, the CNI interviewed 1,118 companies between July 1 and 7, including 442 small companies, 411 medium-sized companies, and 265 large companies.