Brazil Weaker Than Expected Industrial Activity in June

Economics Research 4 August 2026 | 9:16AM EDT

Brazil: Weaker Than Expected Industrial Activity in June

Bottom Line: Industrial activity declined 1.8% mom sa (+1.7% yoy) in June, significantly Alberto Ramos | below consensus (-0.9% mom sa, +3.0% yoy). The weakness of industrial activity in June Goldman Sachs & Co. LLC was broad-based, with all the main industrial sectors declining at the margin. Manufacturing declined 1.8% mom sa (-0.1% mom sa in May), and mining declined 0.6% mom sa. IP expanded 0.3% qoq sa in the second quarter, down from 1.4% qoq sa in Q1. The carry-over for 3Q2026 is at -1.5% qoq sa, and for 2026 as a whole at 0.6%.

The industrial sector struggled mid-2024 but, while weaker in May-June, seems to have turned the corner at the beginning of 2026. Going forward, the industrial sector is expected to find support in significant fiscal transfers to households, the expanding real wage bill of the economy, and government-sponsored industrial policies, but to continue to face headwinds from tight monetary and financial conditions.

Industrial Production: -1.8% mom sa (1.7% yoy) vs. consensus -0.9% mom sa and GS at -0.8% mom sa; prior revised -0.9% mom sa.

1. Industrial production surprised negatively with a -1.8% mom sa in Jun, below the -0.9% mom sa Bloomberg consensus. Prior prints were subject to revisions (Mar/Apr/May -0.26/+0.48/-0.71pt) leaving the May IP level 0.69% lower. 2. The composition of the Jun industrial activity report was soft, with IP dragged down by capital (-1.1% mom sa), intermediate goods (-1.1% mom sa; 60.5% weight), consumer non-durable goods (-4.1% mom sa) and durable goods (-3.2% mom sa; +3.5% mom sa in May). 3. Manufacturing production declined 1.8% mom sa in Jun (-0.1% mom sa in May); mining retrenched -0.6% mom sa (-2.6% mom sa in May). 4. On an annual basis, IP rose 1.7% yoy in Jun (well below consensus for 3.0% yoy), vs 0.2% yoy in May. 5. IP expanded 0.3% qoq sa in the second quarter driven by intermediate (1.5% qoq sa) and capital (0.6% qoq sa) goods. Consumer goods contracted by 2.3% qoq sa with durable consumer goods down 0.5% qoq sa and semi-durable and nondurable goods down 2.4% qoq sa. Manufacturing edged down by 0.1% qoq sa in Q2 and mining output rose by 1.9% qoq sa in the quarter. 6. The carry-over for 3Q2026 is at -1.5% qoq sa, and for 2026 as a whole at 0.6%.

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Soft 2Q26 Industrial Activity Industrial Capacity Utilization Above the Historical Average

Index: 2022=100; s.a. Percent; s.a. 130 85

90 76 Truckers' strike 80 73 70 Covid Sudden Stop Covid Sudden Stop

60 70 Jun-10 Jun-12 Jun-14 Jun-16 Jun-18 Jun-20 Jun-22 Jun-24 Jun-26 Jun-10 Jun-12 Jun-14 Jun-16 Jun-18 Jun-20 Jun-22 Jun-24 Jun-26

Source: IBGE, Goldman Sachs Global Investment Research Source: IBGE, Goldman Sachs Global Investment Research