LATAM Today August 4, 2026

Economics Research 4 August 2026 | 9:28AM EDT

BRAZIL Alberto Ramos | Goldman Sachs & Co. LLC Brazil: Weaker Than Expected Industrial Activity in June Bottom Line: Industrial activity declined 1.8% mom sa (+1.7% yoy) in June, significantly Sergio Armella | 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. Santiago Tellez 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 Goldman Sachs & Co. LLC

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.

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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Softer July Manufacturing PMI; Still Intense but Moderating Input Cost/Price Pressures Bottom Line: The Markit Manufacturing PMI declined by 3.3pt to 47.5 in July, returning into contractionary territory. Employment declined. Domestic demand and production declined in July at a faster rate. Cost pressures remain intense but eased visibly in July. Supplier delivery times lengthened.

1. The Markit Manufacturing PMI declined by 3.3pt in Jul to 47.5, with the headline index returning to contractionary territory. 2. The sequential decrease of the headline PMI indicator was broad-based, and the main components are tracking in contractionary territory: Output (-2.5pt to 46.2), New Orders (-5.0pt to 43.4) and Input purchases (-2.3pt to 47.1). Employment (-3.1pt to 49.3) also declined. 3. Input (cost) and output price pressures are still intense but eased visibly at the margin: Input costs (-5.0pt to 67.9; still 19.7pt above Dec-25) and Output prices (-0.9pt to 60.9; +13.6pt above Dec-25) rose, albeit at a slower rate from June. Part of the very significant Feb-Apr increase in input costs was absorbed in margins. 4. Supplier delivery times lengthened (+3.4pt to 48.8). 5. The backlog of work declined (-4.7pt to 46.8). 6. Stocks of finished items (post-production inventories) declined (-1.8pt to 51.4) and the stocks of purchases/inputs rose at a faster pace (-0.4pt to 53.4).

Data This Week: Tomorrow: Monetary Policy Committee (MPC, Copom); we expect the Copom to cut the Selic policy rate by 25bp to 14.00%.

CHILE Data This Week: Tomorrow: MPC Minutes; the central bank will publish the minutes from the July 28 monetary policy meeting. At that meeting, the MPC kept its policy rate…