Low inventory levels suggest increased future production
CNI Indicators ISSN 1676-0212 • Year 19 • Number 12 • December 2016
INDUSTRIAL SURVEY Low inventory levels suggest increased future production Industry closed 2016 in a difficult situation, but the outlook is more positive than that observed a year ago in December 2015.
Nevertheless, some data suggest that the worst may be behind us. As is usual for December, production fell on a month-over-month basis. The indicator, however, fell less strongly in 2016 than in the last four years. In addition, capacity utilization increased by one percentage point from the same month in 2015. Capacity utilization had not recorded growth on this comparison basis since March 2014.
The current environment is still marked by serious difficulties. Companies continue to indicate lack of demand as a major problem faced by industry, along with high tax burden, interest rates, and client delinquency. Idleness in industry is still very high and business financial conditions remain weak. Enterprises continue to face serious difficulties to access credit and investment intentions stand at significantly low levels.
Another piece of good news is that industrial inventories closed the year below planned levels, suggesting a possible increase in production to replenish inventory levels. This increase could be even more significant if entrepreneurs’ expectations of rising demand and export volumes over the next six months are confirmed.
Inventory levels and actual-planned inventory levels Diffusion indices (0-100 points)
Increase/ above planned levels 50.8 49.6
49.8
50
50.6
50.4
49.3
49.9 49.7
48.9
Decrease/ below planned levels
48.4
48.9
48.9
Evolution
49.2
48.9
48.3
48.2
48.6
Dividing line
47.8
46.6 DEC JAN 2015 2016
46.5 FEB
MAR
APR
MAY
JUN
JUL
AUG
1
SEP
OCT
NOV
Actual-planned
DEC
The indicator varies in the 0-100 interval. Figures above 50 points indicate a month-over-month increase in inventory levels or higher-than-planned actual inventories.
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
PERFORMANCE OF INDUSTRY IN DECEMBER 2016
Production falls less strongly than in previous years Industrial production kept falling in December, which marked the fourth consecutive month of decline in the indicator. The index stood below the 50-point dividing line at 40.7 points. It is common for the index to fall below the dividing line in December: industrial production is usually lower in the month due both to the conclusion of year-end orders and to recesses and vacations in industry. It should be noted that, as compared to previous Decembers, the production index for 2016 is the highest in four years. This is to say that the decline
in industrial activity between November and December 2016 was the lowest since 2013. Industrial jobs also continue to trend downward. At 44.7 points, the index of number of employees is the lowest since July, showing a more pronounced drop in employment. The production and employment indices range from 0 to 100 points, with readings below 50 indicating a decline in production and/or number of employees. The further below 50 points, the more significant and widespread the decline.
Production index for the month of December (2010-2016) Diffusion index (0-100 points)
Increase
50
Decrease
45.3 42.6 41.2
40.7
40.2 38.3 35.5
2010
2011
2012
2013
Production
2014
2015
2016
Dividing line
The index varies in the 0-100 interval. Figures above 50 points indicate a month-over-month increase in production.
2
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Capacity utilization grows on a year-on-year basis The average capacity utilization rate in industry stood at 63%, down by three percentage points between November and December 2016. Compared with December 2015, capacity utilization experienced growth of one percentage point. The last time capacity utilization posted year-over-year growth was in March 2014. Yet, capacity utilization remains at significantly low levels. The index of actual-usual capacity
utilization amounted to 37.4 points in December, standing considerably below the 50-point mark. Compared to December 2015, however, the index is up by 4.8 points. The index of actual-usual capacity utilization ranges from 0 to 100 points, with readings below 50 indicating that capacity utilization is below usual levels. The further below 50 points, the more the indicator is distant from usual levels.
Average capacity utilization Percentage (%)
76 74 72 70 68 66 64
63% Dec/16
62
JAN
FEB
MAR
2011
APR
2012
MAY
JUN
JUL
2013
AUG
2014
SEP
OCT
2015
NOV
DEC
2016
Inventories are below planned levels Inventories dropped in December and are below the levels planned by industry. The inventory index stood at 46.5 points, while that of actualplanned inventory levels hit the mark of 48.6 points. It is worth noting that the index of actual-planned inventory levels has reached an all-time low since April 2010 (the series begins in January 2010).
3
The indices of inventories and actual-planned inventory levels range from 0 to 100 points, with readings above 50 indicating an increase in inventories or higher-than-planned inventory levels for the month.
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
FINANCIAL CONDITIONS OF INDUSTRY IN THE FOURTH QUARTER OF 2016
Financial situation remains weak, but improving slightly The indices measuring satisfaction with financial situation and profits remain at a low level, falling very short of the 50-point dividing line between dissatisfaction and satisfaction among entrepreneurs. The index of satisfaction with profits increased by 1.5 points to 37.9 points, while that of satisfaction with financial situation rose by 0.8 points to 42.3 points. It is worth stressing, however, that both indices continue on a slow recovery path. After reaching
a record low in their historical series in the first quarter of 2016, they have been growing continuously. Compared with the same quarter of 2015, the indices of operating income and financial satisfaction are up respectively by 4.7 points and 3.5 points. The satisfaction indices range from 0 to 100 points, with readings below 50 indicating dissatisfaction with profit margins or financial conditions.
Satisfaction with profits and financial situation Diffusion indices (0-100 points)
Satisfaction
50
Insatisfaction
50.2
42.3
44.9 37.9
37.9
32.7 IV-12
II-13
IV-13
II-14
Financial situation
IV-14
Profits
II-15
IV-15
II-16
IV-16
Dividing line
The indicators range from 0 to 100. Figures above 50 points indicate satisfaction with profits and financial conditions.
Prices of raw materials still on the rise In the fourth quarter of 2016, prices of raw materials grew at the same rate as in the previous quarter. The index of prices of raw materials broke a four-quarter downward trend after growing by 0.9 points and standing above the 50-point mark at 60.2 points.
4
The indices of prices of raw materials range from 0 to 100 points, with readings above 50 indicating an increase in prices in the quarter.
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Prices of raw materials Diffusion indices (0-100 points)
71.0 69.2 67.2
65.6 62.7
61.6
64.7
63.0
64.7 63.6 59.3 60.2
58.9
Increase
50
Decrease IV-13
I-14
II-14
III-14 IV-14
I-15
II-15
Price
III-15 IV-15
I-16
II-16
III-16 IV-16
Dividing line
The indicator varies in the range from 0 to 100. Figures above 50 indicate a quarter-over-quarter increase in prices.
Access to credit remains very difficult The index of access to credit held virtually steady: up by only 0.3 points. The index stood at 30.8 points, significantly below the 50-point mark and close to the lowest figure in the series (29.0 points recorded in the second quarter of 2016). The series began in 2007.
The index ranges from 0 to 100 points, with readings below 50 indicating difficulties to access credit. The further below 50 points, the greater the difficulty.
Ease of access to credit Diffusion indices (0-100 points)
Easy
50
43.7 Difficult
30.8
IV-12
II-13
IV-13
II-14
IV-14
Ease of access to credit
II-15
IV-15
Dividing line
The indicators range from 0 to 100. Figures above 50 points indicate an easier access to credit.
5
II-16
IV-16
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
PROBLEMS FACED BY INDUSTRY IN THE FOURTH QUARTER OF 2016
Decline in interest rates has not yet been felt by industrial entrepreneurs The issues of high tax burden and insufficient domestic demand continue to top the list of problems faced by industrial entrepreneurs. A high tax burden leads the ranking, with 45.9% of all companies indicating it as a major problem faced in the fourth quarter of 2016. Coming next in second place is the issue of insufficient domestic, which was indicated by 38.2% of enterprises. While still high, the percentage of companies marking this item fell for the second consecutive quarter. In the second quarter of 2016, the percentage of responses for this issue was 43.2%. In the same quarter of 2015, that percentage reached 44.2%. The issue of high interest rates remained in third place, showing the same percentage of responses as in the previous quarter: 27.9%. The current downward trend in interest rates that started at the beginning of the quarter (October) has not yet been felt by entrepreneurs.
Main problems faced by industry in the third quarter of 2016 Percentage (%)
45.9 43.7
High tax burden
38.2 41.8
Insufficient domestic demand 27.9 27.9
High interest rates
24.7 24.5
Client delinquency
22.1 22.1
Lack of working capital
19.0 20.8
Lack or high costs of raw materials Unfair competition
14.9 14.0
Exchange rate
14.8 14.1 13.3 12.9
Power shortages or high costs of energy
Client delinquency ranked fourth among major problems facing industry and showed the same importance level between the third and fourth quarters of 2016. The item was marked by 24.7% of companies. The issue of lack of working capital comes next, with 22.1% of all responses.
11.2 9.4
Excessive red tape
10.0 10.0
Lack of long-term funding
9.8 12.8
Insufficient foreign demand Difficulties with transportation logistics
8.0 7.2
Competition with imported goods
7.1 7.2
Legal uncertainty
5.2 4.2
Lack or high cost of skilled labor
5.1 5.5
Other
3.8 3.1
None
3.4 1.9
Q4 2016 Q3 2016
In the survey, entrepreneurs are asked to indicate up to three items representing the main problems faced by their companies, so the sum of the percentages exceeds 100%.
6
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
EXPECTATIONS IN JANUARY 2017
More positive expectations at the beginning of the year The expectation indices for January 2017 showed positive changes as compared to December 2016, and particularly as compared to January 2016. For the coming months, entrepreneurs expect demand and
export volumes to increase. In addition, they expect to maintain their purchases of raw materials at current levels and to reduce the current pace of layoffs.
Expectations indices Diffusion indices (0-100 points)
Exports
Expected demand
Increase
Increase
52.4
52.6
51.9 50
50
49.9
49.1 44.8 Decrease
Decrease
MAR
JAN 2016
MAY
JUL
SEP
NOV
JAN 2017
MAR
JAN 2016
Expected exports Dividing line
MAY
JUL
SEP
NOV
JAN 2017
Expected demand Dividing line
Purchases of inputs and raw materials
Number of employees
Increase
Increase
50.0
50
50
46.4 45.5
47.2 Decrease
Decrease
43.6 JAN 2016
MAR
MAY
JUL
SEP
NOV
41.3
JAN 2016
JAN 2017
Expected purchases of inputs and raw materials Dividing line
MAR
MAY
JUL
Expected number of employees Dividing line
The indicators range from 0 to 100. Figures below 50 indicate an expected decline.
7
SEP
NOV
JAN 2017
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Investment intentions keep growing slowly The investment intentions index held virtually steady in January 2017, as it grew by 0.7 points from December 2016. The index has not declined in ninth months, accumulating a 6.3-point growth during the period. It should be noted, however, that the index remains at low levels. The investment intentions index ranges from 0 to 100 points. The higher the index, the more likely entrepreneurs are to invest.
Investment intentions Diffusion indices (0-100 points)
65
61.5
60 55 50
45.3 45 40
JAN APR 2014
JUL
OCT
JAN APR 2015
JUL
OCT
JAN APR 2016
JUL
OCT
JAN 2017
The index ranges from 0 to 100 points. The higher the index, the more likely industry is to invest.
RESULTS Main problems GENERAL III-16
SMALL
IV-16
III-16
MEDIUM
IV-16
III-16
LARGE
IV-16
III-16
IV-16
%
%
Ranking
%
%
Ranking
%
%
Ranking
%
%
Ranking
High tax burden
43.7
45.9
1
43.6
45.7
1
44.7
47.9
1
43.2
44.9
1
Insufficient domestic demand
41.8
38.2
2
36.8
36.5
2
41.2
37.9
2
44.5
39.3
2
High interest rates
27.9
27.9
3
26.5
27.9
4
28.7
27.6
3
28.2
28.1
3
Client delinquency
24.5
24.7
4
31.7
31.0
3
26.0
26.4
4
20.2
20.6
5
Lack of working capital
22.1
22.1
5
23.9
27.0
5
24.6
24.0
5
20.0
18.7
6
Lack or high costs of raw materials
20.8
19.0
6
21.4
18.1
7
20.9
20.6
6
20.5
18.7
6
Unfair competition
14.0
14.9
7
21.5
23.0
6
16.9
16.2
7
8.8
10.2
12
Exchange rate
14.1
14.8
8
4.5
4.9
15
8.1
10.2
10
22.0
22.2
4
Lack or high cost of energy
12.9
13.3
9
14.6
16.8
8
15.6
15.2
8
10.7
10.6
11
Excessive red tape
9.4
11.2
10
9.4
10.6
9
9.4
11.0
9
9.5
11.6
8
Lack of long-term funding
10.0
10.0
11
9.2
8.7
10
10.2
9.8
11
10.2
10.8
9
Insufficient foreign demand
12.8
9.8
12
13.0
7.9
12
11.3
9.8
11
13.4
10.8
9
Difficulties with transportation logistics
7.2
8.0
13
6.3
5.1
14
5.9
7.6
14
8.4
9.6
13
Competition with imported goods
7.2
7.1
14
5.6
6.0
13
7.7
7.9
13
7.7
7.3
14
Legal uncertainty
4.2
5.2
15
3.1
4.0
16
4.5
5.6
15
4.5
5.6
15
Lack or high cost of skilled labor
5.5
5.1
16
8.6
8.3
11
5.9
4.7
16
3.8
3.7
17
Other
3.1
3.8
17
3.0
3.9
17
3.6
3.2
17
2.9
4.0
16
None
1.9
3.4
-
3.1
5.0
-
1.9
3.2
-
1.4
2.7
-
ITEMS
Note: In the survey, entrepreneurs are asked to indicate up to three items representing the main problems faced by their companies, so the sum of percentages exceeds 100%.
8
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Performance of industry NUMBER OF EMPLOYEES EVOLUTION
PRODUCTION EVOLUTION
CAPACITY UTILIZATION (%)
ACTUAL-USUAL CAPACITY UTILIZATION
INVENTORIES LEVELS EVOLUTION
ACTUAL-PLANNED INVENTORIES
Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16
Total
35.5
47.0
40.7
41.5
45.8
44.7
62
66
63
32.6
38.2
37.4
46.6
48.3
46.5
49.8
49.2
48.6
BY INDUSTRIAL ACTIVITY Mining and quarrying
43.7
49.1
45.6
44.5
46.9
44.6
69
71
68
37.1
43.4
38.1
47.7
50.0
46.0
50.8
46.8
46.6
Manufacturing 35.3
46.9
40.6
41.4
45.8
44.8
62
66
63
32.5
38.0
37.4
46.6
48.2
46.5
49.9
49.3
48.6
BY COMPANY SIZE Small1
36.7
45.0
40.5
41.3
44.6
44.0
58
60
57
32.1
37.0
35.9
43.4
46.9
46.0
44.2
45.1
45.4
Medium2
35.1
46.8
41.5
40.8
45.6
44.4
60
64
62
32.0
37.7
36.9
47.2
48.3
46.1
48.8
49.5
48.7
Large3
35.2
48.1
40.3
42.0
46.4
45.2
65
70
67
33.2
39.0
38.4
47.8
48.9
47.0
53.2
51.1
50.1
The indicators vary in the 0-100 interval. Figures above 50 points suggest a positive evolution, higher-than-planned inventories or higher-than-usual capacity utilization. 1 Company with 10-49 employees. 2 - Company with 50-249 employees. 3 - Company with 250-plus employees.
Financial conditions in the quarter AVERAGE PRICE OF RAW MATERIALS
PROFITS
Total
FINANCIAL SITUATION
ACCESS TO CREDIT
IV 2015
III 2016
IV 2016
IV 2015
III 2016
IV 2016
IV 2015
III 2016
IV 2016
IV 2015
III 2016
IV 2016
33.2
36.4
37.9
67.2
59.3
60.2
38.8
41.5
42.3
30.5
30.5
30.8
BY INDUSTRIAL ACTIVITY Mining and quarrying
38.4
36.1
41.6
62.8
56.5
57.9
41.2
42.4
42.2
30.8
35.1
29.7
Manufacturing
33.0
36.3
37.7
67.4
59.4
60.3
38.7
41.4
42.3
30.4
30.4
30.9
BY COMPANY SIZE Small1
29.5
33.1
33.6
68.8
60.0
60.5
33.4
36.6
36.3
28.6
27.1
26.9
Medium2
31.4
34.3
35.0
67.7
59.6
61.6
36.6
38.8
39.2
27.4
27.8
28.8
Large3
36.0
39.1
41.5
66.1
58.7
59.3
42.7
45.3
46.8
33.0
33.6
33.7
The indicators range in the 0-100 interval. Figures above 50 indicate satisfaction with profit margins and financial conditions, easier access to credit, or an increase in the average price of raw materials. 1 - Company with 10-49 employees. 2 - Company with 50-249 employees. 3 - Company with 250-plus employees.
9
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Industrial expectations DEMAND
Total
EXPORTS VOLUMES
PURCHASES OF RAW MATERIALS
NUMBER OF EMPLOYEES
INVESTMENT INTENTIONS*
.Jan/16
Dec/16
.Jan/17
.Jan/16
Dec/16
.Jan/17
.Jan/16
Dec/16
.Jan/17
.Jan/16
Dec/16
.Jan/17
.Jan/16
Dec/16
.Jan/17
44.8
49.1
51.9
52.4
49.9
52.6
43.6
47.2
50.0
41.3
45.5
46.4
41.6
44.6
45.3
BY INDUSTRIAL ACTIVITY Mining and quarrying
49.9
44.1
46.9
47.6
54.1
51.6
44.3
42.8
45.3
41.6
44.6
42.2
47.9
46.3
46.7
Manufacturing
44.6
49.3
52.1
52.4
49.7
52.4
43.6
47.4
50.2
41.3
45.6
46.6
41.3
44.5
45.3
BY COMPANY SIZE Small1
41.9
47.0
49.7
46.4
47.1
50.2
41.1
44.7
48.1
39.6
44.6
45.0
29.9
31.7
31.9
Medium2
43.2
47.8
50.7
53.3
49.4
51.8
42.1
46.3
49.5
39.5
45.0
45.1
36.6
40.3
40.8
Large3
47.0
50.8
53.6
54.9
51.6
54.2
45.7
48.9
51.3
43.1
46.3
47.8
50.0
53.2
54.3
The indicators vary in the 0-100 interval. Figures above 50 points indicate positive expectations. * The indicator varies in the 0-100 interval. The higher the index, the more likely industry is to invest. 1 - Company with 10 to 49 employees. 2 - Company with 50-249 employees. 3 - Company with 250-plus employees.
i
Learn more
Technical Specifications
For more information on the survey, including historical series and methodology, kindly visit: www.cni.org.br/e_sondindustrial
Sample profile: 2,268 enterprises, including 929 small, 818 medium and 521 large companies. Data collection period: January 3-13, 2017.
INDUSTRIAL SURVEY | English version of “Sondagem Industrial - dezembro 2016” | Monthly Publication of the National Confederation of Industry - CNI | www.cni.org.br | Policy and Strategy Unit - DIRPE | Economic Policy Unit - PEC| Executive manager: Flávio Castelo Branco | Research and Competitiveness Unit - GPC | Executive manager: Renato da Fonseca | Analysis: Marcelo Souza Azevedo | Team: Aretha Silicia Lopez Soares, Roxana Rossy Campos e Taryane Carvalho Perné | CNI Publishing Center | Graphic design supervision: Alisson Costa and Carla Gadêlha | Customer Service - Phone: +55 (61) 3317-9992 – email: [email protected] | This publication may be copied, provided that the source is mentioned.
INDUSTRIAL SURVEY Low inventory levels suggest increased future production Industry closed 2016 in a difficult situation, but the outlook is more positive than that observed a year ago in December 2015.
Nevertheless, some data suggest that the worst may be behind us. As is usual for December, production fell on a month-over-month basis. The indicator, however, fell less strongly in 2016 than in the last four years. In addition, capacity utilization increased by one percentage point from the same month in 2015. Capacity utilization had not recorded growth on this comparison basis since March 2014.
The current environment is still marked by serious difficulties. Companies continue to indicate lack of demand as a major problem faced by industry, along with high tax burden, interest rates, and client delinquency. Idleness in industry is still very high and business financial conditions remain weak. Enterprises continue to face serious difficulties to access credit and investment intentions stand at significantly low levels.
Another piece of good news is that industrial inventories closed the year below planned levels, suggesting a possible increase in production to replenish inventory levels. This increase could be even more significant if entrepreneurs’ expectations of rising demand and export volumes over the next six months are confirmed.
Inventory levels and actual-planned inventory levels Diffusion indices (0-100 points)
Increase/ above planned levels 50.8 49.6
49.8
50
50.6
50.4
49.3
49.9 49.7
48.9
Decrease/ below planned levels
48.4
48.9
48.9
Evolution
49.2
48.9
48.3
48.2
48.6
Dividing line
47.8
46.6 DEC JAN 2015 2016
46.5 FEB
MAR
APR
MAY
JUN
JUL
AUG
1
SEP
OCT
NOV
Actual-planned
DEC
The indicator varies in the 0-100 interval. Figures above 50 points indicate a month-over-month increase in inventory levels or higher-than-planned actual inventories.
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
PERFORMANCE OF INDUSTRY IN DECEMBER 2016
Production falls less strongly than in previous years Industrial production kept falling in December, which marked the fourth consecutive month of decline in the indicator. The index stood below the 50-point dividing line at 40.7 points. It is common for the index to fall below the dividing line in December: industrial production is usually lower in the month due both to the conclusion of year-end orders and to recesses and vacations in industry. It should be noted that, as compared to previous Decembers, the production index for 2016 is the highest in four years. This is to say that the decline
in industrial activity between November and December 2016 was the lowest since 2013. Industrial jobs also continue to trend downward. At 44.7 points, the index of number of employees is the lowest since July, showing a more pronounced drop in employment. The production and employment indices range from 0 to 100 points, with readings below 50 indicating a decline in production and/or number of employees. The further below 50 points, the more significant and widespread the decline.
Production index for the month of December (2010-2016) Diffusion index (0-100 points)
Increase
50
Decrease
45.3 42.6 41.2
40.7
40.2 38.3 35.5
2010
2011
2012
2013
Production
2014
2015
2016
Dividing line
The index varies in the 0-100 interval. Figures above 50 points indicate a month-over-month increase in production.
2
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Capacity utilization grows on a year-on-year basis The average capacity utilization rate in industry stood at 63%, down by three percentage points between November and December 2016. Compared with December 2015, capacity utilization experienced growth of one percentage point. The last time capacity utilization posted year-over-year growth was in March 2014. Yet, capacity utilization remains at significantly low levels. The index of actual-usual capacity
utilization amounted to 37.4 points in December, standing considerably below the 50-point mark. Compared to December 2015, however, the index is up by 4.8 points. The index of actual-usual capacity utilization ranges from 0 to 100 points, with readings below 50 indicating that capacity utilization is below usual levels. The further below 50 points, the more the indicator is distant from usual levels.
Average capacity utilization Percentage (%)
76 74 72 70 68 66 64
63% Dec/16
62
JAN
FEB
MAR
2011
APR
2012
MAY
JUN
JUL
2013
AUG
2014
SEP
OCT
2015
NOV
DEC
2016
Inventories are below planned levels Inventories dropped in December and are below the levels planned by industry. The inventory index stood at 46.5 points, while that of actualplanned inventory levels hit the mark of 48.6 points. It is worth noting that the index of actual-planned inventory levels has reached an all-time low since April 2010 (the series begins in January 2010).
3
The indices of inventories and actual-planned inventory levels range from 0 to 100 points, with readings above 50 indicating an increase in inventories or higher-than-planned inventory levels for the month.
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
FINANCIAL CONDITIONS OF INDUSTRY IN THE FOURTH QUARTER OF 2016
Financial situation remains weak, but improving slightly The indices measuring satisfaction with financial situation and profits remain at a low level, falling very short of the 50-point dividing line between dissatisfaction and satisfaction among entrepreneurs. The index of satisfaction with profits increased by 1.5 points to 37.9 points, while that of satisfaction with financial situation rose by 0.8 points to 42.3 points. It is worth stressing, however, that both indices continue on a slow recovery path. After reaching
a record low in their historical series in the first quarter of 2016, they have been growing continuously. Compared with the same quarter of 2015, the indices of operating income and financial satisfaction are up respectively by 4.7 points and 3.5 points. The satisfaction indices range from 0 to 100 points, with readings below 50 indicating dissatisfaction with profit margins or financial conditions.
Satisfaction with profits and financial situation Diffusion indices (0-100 points)
Satisfaction
50
Insatisfaction
50.2
42.3
44.9 37.9
37.9
32.7 IV-12
II-13
IV-13
II-14
Financial situation
IV-14
Profits
II-15
IV-15
II-16
IV-16
Dividing line
The indicators range from 0 to 100. Figures above 50 points indicate satisfaction with profits and financial conditions.
Prices of raw materials still on the rise In the fourth quarter of 2016, prices of raw materials grew at the same rate as in the previous quarter. The index of prices of raw materials broke a four-quarter downward trend after growing by 0.9 points and standing above the 50-point mark at 60.2 points.
4
The indices of prices of raw materials range from 0 to 100 points, with readings above 50 indicating an increase in prices in the quarter.
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Prices of raw materials Diffusion indices (0-100 points)
71.0 69.2 67.2
65.6 62.7
61.6
64.7
63.0
64.7 63.6 59.3 60.2
58.9
Increase
50
Decrease IV-13
I-14
II-14
III-14 IV-14
I-15
II-15
Price
III-15 IV-15
I-16
II-16
III-16 IV-16
Dividing line
The indicator varies in the range from 0 to 100. Figures above 50 indicate a quarter-over-quarter increase in prices.
Access to credit remains very difficult The index of access to credit held virtually steady: up by only 0.3 points. The index stood at 30.8 points, significantly below the 50-point mark and close to the lowest figure in the series (29.0 points recorded in the second quarter of 2016). The series began in 2007.
The index ranges from 0 to 100 points, with readings below 50 indicating difficulties to access credit. The further below 50 points, the greater the difficulty.
Ease of access to credit Diffusion indices (0-100 points)
Easy
50
43.7 Difficult
30.8
IV-12
II-13
IV-13
II-14
IV-14
Ease of access to credit
II-15
IV-15
Dividing line
The indicators range from 0 to 100. Figures above 50 points indicate an easier access to credit.
5
II-16
IV-16
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
PROBLEMS FACED BY INDUSTRY IN THE FOURTH QUARTER OF 2016
Decline in interest rates has not yet been felt by industrial entrepreneurs The issues of high tax burden and insufficient domestic demand continue to top the list of problems faced by industrial entrepreneurs. A high tax burden leads the ranking, with 45.9% of all companies indicating it as a major problem faced in the fourth quarter of 2016. Coming next in second place is the issue of insufficient domestic, which was indicated by 38.2% of enterprises. While still high, the percentage of companies marking this item fell for the second consecutive quarter. In the second quarter of 2016, the percentage of responses for this issue was 43.2%. In the same quarter of 2015, that percentage reached 44.2%. The issue of high interest rates remained in third place, showing the same percentage of responses as in the previous quarter: 27.9%. The current downward trend in interest rates that started at the beginning of the quarter (October) has not yet been felt by entrepreneurs.
Main problems faced by industry in the third quarter of 2016 Percentage (%)
45.9 43.7
High tax burden
38.2 41.8
Insufficient domestic demand 27.9 27.9
High interest rates
24.7 24.5
Client delinquency
22.1 22.1
Lack of working capital
19.0 20.8
Lack or high costs of raw materials Unfair competition
14.9 14.0
Exchange rate
14.8 14.1 13.3 12.9
Power shortages or high costs of energy
Client delinquency ranked fourth among major problems facing industry and showed the same importance level between the third and fourth quarters of 2016. The item was marked by 24.7% of companies. The issue of lack of working capital comes next, with 22.1% of all responses.
11.2 9.4
Excessive red tape
10.0 10.0
Lack of long-term funding
9.8 12.8
Insufficient foreign demand Difficulties with transportation logistics
8.0 7.2
Competition with imported goods
7.1 7.2
Legal uncertainty
5.2 4.2
Lack or high cost of skilled labor
5.1 5.5
Other
3.8 3.1
None
3.4 1.9
Q4 2016 Q3 2016
In the survey, entrepreneurs are asked to indicate up to three items representing the main problems faced by their companies, so the sum of the percentages exceeds 100%.
6
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
EXPECTATIONS IN JANUARY 2017
More positive expectations at the beginning of the year The expectation indices for January 2017 showed positive changes as compared to December 2016, and particularly as compared to January 2016. For the coming months, entrepreneurs expect demand and
export volumes to increase. In addition, they expect to maintain their purchases of raw materials at current levels and to reduce the current pace of layoffs.
Expectations indices Diffusion indices (0-100 points)
Exports
Expected demand
Increase
Increase
52.4
52.6
51.9 50
50
49.9
49.1 44.8 Decrease
Decrease
MAR
JAN 2016
MAY
JUL
SEP
NOV
JAN 2017
MAR
JAN 2016
Expected exports Dividing line
MAY
JUL
SEP
NOV
JAN 2017
Expected demand Dividing line
Purchases of inputs and raw materials
Number of employees
Increase
Increase
50.0
50
50
46.4 45.5
47.2 Decrease
Decrease
43.6 JAN 2016
MAR
MAY
JUL
SEP
NOV
41.3
JAN 2016
JAN 2017
Expected purchases of inputs and raw materials Dividing line
MAR
MAY
JUL
Expected number of employees Dividing line
The indicators range from 0 to 100. Figures below 50 indicate an expected decline.
7
SEP
NOV
JAN 2017
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Investment intentions keep growing slowly The investment intentions index held virtually steady in January 2017, as it grew by 0.7 points from December 2016. The index has not declined in ninth months, accumulating a 6.3-point growth during the period. It should be noted, however, that the index remains at low levels. The investment intentions index ranges from 0 to 100 points. The higher the index, the more likely entrepreneurs are to invest.
Investment intentions Diffusion indices (0-100 points)
65
61.5
60 55 50
45.3 45 40
JAN APR 2014
JUL
OCT
JAN APR 2015
JUL
OCT
JAN APR 2016
JUL
OCT
JAN 2017
The index ranges from 0 to 100 points. The higher the index, the more likely industry is to invest.
RESULTS Main problems GENERAL III-16
SMALL
IV-16
III-16
MEDIUM
IV-16
III-16
LARGE
IV-16
III-16
IV-16
%
%
Ranking
%
%
Ranking
%
%
Ranking
%
%
Ranking
High tax burden
43.7
45.9
1
43.6
45.7
1
44.7
47.9
1
43.2
44.9
1
Insufficient domestic demand
41.8
38.2
2
36.8
36.5
2
41.2
37.9
2
44.5
39.3
2
High interest rates
27.9
27.9
3
26.5
27.9
4
28.7
27.6
3
28.2
28.1
3
Client delinquency
24.5
24.7
4
31.7
31.0
3
26.0
26.4
4
20.2
20.6
5
Lack of working capital
22.1
22.1
5
23.9
27.0
5
24.6
24.0
5
20.0
18.7
6
Lack or high costs of raw materials
20.8
19.0
6
21.4
18.1
7
20.9
20.6
6
20.5
18.7
6
Unfair competition
14.0
14.9
7
21.5
23.0
6
16.9
16.2
7
8.8
10.2
12
Exchange rate
14.1
14.8
8
4.5
4.9
15
8.1
10.2
10
22.0
22.2
4
Lack or high cost of energy
12.9
13.3
9
14.6
16.8
8
15.6
15.2
8
10.7
10.6
11
Excessive red tape
9.4
11.2
10
9.4
10.6
9
9.4
11.0
9
9.5
11.6
8
Lack of long-term funding
10.0
10.0
11
9.2
8.7
10
10.2
9.8
11
10.2
10.8
9
Insufficient foreign demand
12.8
9.8
12
13.0
7.9
12
11.3
9.8
11
13.4
10.8
9
Difficulties with transportation logistics
7.2
8.0
13
6.3
5.1
14
5.9
7.6
14
8.4
9.6
13
Competition with imported goods
7.2
7.1
14
5.6
6.0
13
7.7
7.9
13
7.7
7.3
14
Legal uncertainty
4.2
5.2
15
3.1
4.0
16
4.5
5.6
15
4.5
5.6
15
Lack or high cost of skilled labor
5.5
5.1
16
8.6
8.3
11
5.9
4.7
16
3.8
3.7
17
Other
3.1
3.8
17
3.0
3.9
17
3.6
3.2
17
2.9
4.0
16
None
1.9
3.4
-
3.1
5.0
-
1.9
3.2
-
1.4
2.7
-
ITEMS
Note: In the survey, entrepreneurs are asked to indicate up to three items representing the main problems faced by their companies, so the sum of percentages exceeds 100%.
8
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Performance of industry NUMBER OF EMPLOYEES EVOLUTION
PRODUCTION EVOLUTION
CAPACITY UTILIZATION (%)
ACTUAL-USUAL CAPACITY UTILIZATION
INVENTORIES LEVELS EVOLUTION
ACTUAL-PLANNED INVENTORIES
Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16 Dec/15 Nov/16 Dec/16
Total
35.5
47.0
40.7
41.5
45.8
44.7
62
66
63
32.6
38.2
37.4
46.6
48.3
46.5
49.8
49.2
48.6
BY INDUSTRIAL ACTIVITY Mining and quarrying
43.7
49.1
45.6
44.5
46.9
44.6
69
71
68
37.1
43.4
38.1
47.7
50.0
46.0
50.8
46.8
46.6
Manufacturing 35.3
46.9
40.6
41.4
45.8
44.8
62
66
63
32.5
38.0
37.4
46.6
48.2
46.5
49.9
49.3
48.6
BY COMPANY SIZE Small1
36.7
45.0
40.5
41.3
44.6
44.0
58
60
57
32.1
37.0
35.9
43.4
46.9
46.0
44.2
45.1
45.4
Medium2
35.1
46.8
41.5
40.8
45.6
44.4
60
64
62
32.0
37.7
36.9
47.2
48.3
46.1
48.8
49.5
48.7
Large3
35.2
48.1
40.3
42.0
46.4
45.2
65
70
67
33.2
39.0
38.4
47.8
48.9
47.0
53.2
51.1
50.1
The indicators vary in the 0-100 interval. Figures above 50 points suggest a positive evolution, higher-than-planned inventories or higher-than-usual capacity utilization. 1 Company with 10-49 employees. 2 - Company with 50-249 employees. 3 - Company with 250-plus employees.
Financial conditions in the quarter AVERAGE PRICE OF RAW MATERIALS
PROFITS
Total
FINANCIAL SITUATION
ACCESS TO CREDIT
IV 2015
III 2016
IV 2016
IV 2015
III 2016
IV 2016
IV 2015
III 2016
IV 2016
IV 2015
III 2016
IV 2016
33.2
36.4
37.9
67.2
59.3
60.2
38.8
41.5
42.3
30.5
30.5
30.8
BY INDUSTRIAL ACTIVITY Mining and quarrying
38.4
36.1
41.6
62.8
56.5
57.9
41.2
42.4
42.2
30.8
35.1
29.7
Manufacturing
33.0
36.3
37.7
67.4
59.4
60.3
38.7
41.4
42.3
30.4
30.4
30.9
BY COMPANY SIZE Small1
29.5
33.1
33.6
68.8
60.0
60.5
33.4
36.6
36.3
28.6
27.1
26.9
Medium2
31.4
34.3
35.0
67.7
59.6
61.6
36.6
38.8
39.2
27.4
27.8
28.8
Large3
36.0
39.1
41.5
66.1
58.7
59.3
42.7
45.3
46.8
33.0
33.6
33.7
The indicators range in the 0-100 interval. Figures above 50 indicate satisfaction with profit margins and financial conditions, easier access to credit, or an increase in the average price of raw materials. 1 - Company with 10-49 employees. 2 - Company with 50-249 employees. 3 - Company with 250-plus employees.
9
Industrial Survey ISSN 1676-0212 • Year 19 • Number 12 • December 2016
Industrial expectations DEMAND
Total
EXPORTS VOLUMES
PURCHASES OF RAW MATERIALS
NUMBER OF EMPLOYEES
INVESTMENT INTENTIONS*
.Jan/16
Dec/16
.Jan/17
.Jan/16
Dec/16
.Jan/17
.Jan/16
Dec/16
.Jan/17
.Jan/16
Dec/16
.Jan/17
.Jan/16
Dec/16
.Jan/17
44.8
49.1
51.9
52.4
49.9
52.6
43.6
47.2
50.0
41.3
45.5
46.4
41.6
44.6
45.3
BY INDUSTRIAL ACTIVITY Mining and quarrying
49.9
44.1
46.9
47.6
54.1
51.6
44.3
42.8
45.3
41.6
44.6
42.2
47.9
46.3
46.7
Manufacturing
44.6
49.3
52.1
52.4
49.7
52.4
43.6
47.4
50.2
41.3
45.6
46.6
41.3
44.5
45.3
BY COMPANY SIZE Small1
41.9
47.0
49.7
46.4
47.1
50.2
41.1
44.7
48.1
39.6
44.6
45.0
29.9
31.7
31.9
Medium2
43.2
47.8
50.7
53.3
49.4
51.8
42.1
46.3
49.5
39.5
45.0
45.1
36.6
40.3
40.8
Large3
47.0
50.8
53.6
54.9
51.6
54.2
45.7
48.9
51.3
43.1
46.3
47.8
50.0
53.2
54.3
The indicators vary in the 0-100 interval. Figures above 50 points indicate positive expectations. * The indicator varies in the 0-100 interval. The higher the index, the more likely industry is to invest. 1 - Company with 10 to 49 employees. 2 - Company with 50-249 employees. 3 - Company with 250-plus employees.
i
Learn more
Technical Specifications
For more information on the survey, including historical series and methodology, kindly visit: www.cni.org.br/e_sondindustrial
Sample profile: 2,268 enterprises, including 929 small, 818 medium and 521 large companies. Data collection period: January 3-13, 2017.
INDUSTRIAL SURVEY | English version of “Sondagem Industrial - dezembro 2016” | Monthly Publication of the National Confederation of Industry - CNI | www.cni.org.br | Policy and Strategy Unit - DIRPE | Economic Policy Unit - PEC| Executive manager: Flávio Castelo Branco | Research and Competitiveness Unit - GPC | Executive manager: Renato da Fonseca | Analysis: Marcelo Souza Azevedo | Team: Aretha Silicia Lopez Soares, Roxana Rossy Campos e Taryane Carvalho Perné | CNI Publishing Center | Graphic design supervision: Alisson Costa and Carla Gadêlha | Customer Service - Phone: +55 (61) 3317-9992 – email: [email protected] | This publication may be copied, provided that the source is mentioned.
