Industry continues on recovery path AWS
CNI Indicators ISSN 1676-0212 • Year 20 • Number 9 • September 2017
20 YEARS
INDUSTRIAL SURVEY Industry continues on recovery path The September issue of the Industrial Survey shows that industry continued to post the same positive results seen in July and August. As in August, number of employees remained virtually stable, showing that the layoff cycle in industry is coming close to an end. As is usual for the period, production declined in the month. The rate of decline in September 2017, however, is lower than in previous years. The indicator of actual-usual capacity utilization decreased by 1.6 points between August and September, but is still above (4.7 points) the figure registered in September 2016.
situation in general, but their dissatisfaction continues to decline. Access to credit remains difficult, but the trend in the indicator shows a reduction in these difficulties. Among major problems faced in the quarter, lack of demand is still in second place in the ranking – trailing only behind the item ‘high tax burden’ – but continues to lose importance. In addition, the expectation indices showed a slowdown in October. Prospects remain favorable, but the result for the month brought the uptrend in optimism to a halt. Investment intentions continued on the upward trend seen in previous months, but held steady in October.
It is worth noting that the quarterly data show that financial conditions keep improving. Entrepreneurs are still dissatisfied with their profit margins and financial
Actual-usual activity capacity utilization Diffusion index (0-100 points)
Above the usual
50
Below the usual
Actual-usual capacity utilization
41.8
37.1
33.8
SEP 2014
MAR 2015
SEP
MAR 2016
SEP
1
MAR 2017
SEP
Dividing line The index ranges the 0 to 100 points. Figures below 50 points indicate that capacity utilization is below usual levels for the month. The further below 50 points, the greater the distance between actual and usual levels.
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
PERFORMANCE OF INDUSTRY IN SEPTEMBER 2017
Production falls less strongly The production index stood at 48.1 points in September. Albeit below the 50-point dividing line, the index is higher than that recorded in 2015 and 2016. This is to say that the decline in production between August and September was less pronounced in 2017 than in the same period in previous years.
The index of number of employees in turn remained practically stable as it reached 49.0 points in September (down from 49.1 points in August). Since the indicator remained close to the dividing line, it indicates that employee numbers held virtually steady in the month.
Production in September (2011-2017) Diffusion index (0-100 points)
Decrease
50.2
50
49.7
49.1
48.1 47.1 Increase
45.8 42.0 2011
2012
2013
2014
Production
2015
2016
2017
Dividing line
The index varies in the 0-100 interval. Figures above 50 points indicate a month-over-month increase in production.
Capacity utilization remains at very low levels Industrial activity is still significantly below usual levels. The indicator measuring actualusual capacity utilization levels fell by 1.6 points to 41.8 points. The index is one percentage point higher than the figure recorded in September 2015 and 2016, but remains far short of the 50-point dividing line between below and above usual activity levels for the month.
2
The average capacity utilization rate reached 66% in September. The indicator is down by one percentage point from August and at the same level as the figure recorded in the same month in 2015 and 2016.
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
Average capacity utilization rate Percentage (%)
76 74 2011
72
2012
70
2013
68
2014 2015
66 66% Sep/17
64
2016 2017
62
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Small inventory excess The inventory index remained close to the dividing line at 49.6 points, showing that inventory levels held steady from August to September. The index measuring actual-planned inventory levels in
turn increased by 0.7 points to 50.7 points. As a result, the index drifted slightly away from the dividing line, indicating that inventories are slightly above the levels planned by companies.
Inventory levels and actual-planned inventory levels Diffusion indices (0-100 points)*
Increase/ above planned level
49.9
50
50.1
50.3
50.9 50.4
50.9
51.1 50.7
50.7 51.0 50.1
49.9
49.8
49.7
49.4
49.5
49.6
AUG
SEP
49.1
49.0 Decrease/ under planned level
50.0
48.3
46.5 SEP 2016
OCT
NOV
DEC
JAN 2017 Evolution
FEB
MAR
APR
Dividing line
MAY
JUN
JUL
Actual-planned
* Figures above 50 points indicate an increase in inventory levels or higher-than-planned actual inventories.
3
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
FINANCIAL CONDITIONS OF INDUSTRY IN THE 3 RD QUARTER OF 2017
Financial conditions are recovering The index measuring satisfaction with financial conditions and profits remain below 50 points, indicating that companies are dissatisfied with their financial situation. Nevertheless, it is worth stressing that both indices are up for the sixth consecutive quarter, indicating that companies’ financial conditions are on a recovery path. The index measuring satisfaction with profits reached 41.8 points in the third quarter of 2017, up by 3.1 points from the figure observed in the previous quarter and by 5.4 points from the level recorded in the third quarter of 2016.
Satisfaction with profits and financial situation Diffusion index (0-100 points)
Satisfaction 50 Dissatisfaction
45.5 41.8
The index of satisfaction with financial conditions stood at 45.5 points in the third quarter, up by 1.5 points from the previous quarter and by 4 points from the same quarter in 2016.
III-14
I-15
III-15
I-16
Financial situation
III-16
Profits
I-17
III-17
Dividing line
The indicators range from 0 to 100. Figures above 50 points indicate satisfaction with profit margins and financial conditions.
Access to credit remains difficult The index measuring ease of access to credit has been on a recovery path for five quarters. Yet, it remains below the 50-point dividing line at 35.5 points, indicating that companies are still facing greater-than-usual difficulties to access credit. The index grew by 1.4 points as compared to the previous quarter and by 5 points as compared to the same quarter in 2016.
Ease of access to credit Diffusion index (0-100 points)
Easy 50 Difficult
35.5
III-14
I-15
III-15
I-16
Ease of access to credit
III-16
I-17
III-17
Dividing line
The indicators range from 0 to 100. Figures above 50 points indicate easier access to credit.
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Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
PROBLEMS FACED BY INDUSTRY IN THE 3 RD QUARTER OF 2017
Lack of demand loses importance, but continues to rank second among major problems facing companies In the third quarter of 2017, a high tax burden is still the number one problem faced by industry. The issue was indicated by 45.2% of companies, a figure identical to that seen last quarter. Insufficient domestic demand continues to rank second among major problems, but the percentage of companies indicating the issue keeps falling. In the third quarter, the percentage of responses fell to 36.6% from 39% in the previous quarter and from 40.4% in the first quarter.
Main problems faced by industry in the 3RD quarter of 2017 Percentage (%) 45.2 45.2
High tax burden 36.6 39.0
Insufficient domestic demand 21.0 21.9
Client delinquency
18.5 18.9
Lack of working capital
Ranking third is the issue of client delinquency, with 21.0% of answers. The percentage of companies indicating this problem reached 24.7% in the fourth quarter of 2016 and has been falling steadily since then. Despite the decline in the number of companies indicating the item ‘lack of working capital,’ it surpassed the issue of high interest rates and is now ranking fourth among major problems with 18.5% of answers. The issue of high interest rates, which has also been indicated by an even smaller number of companies, ranked fifth with 18.2% of responses. In the fourth quarter of 2016, 27.9% of companies had indicated this problem. Unfair competition, which had been indicated by an increasing percentage of companies for six quarters, remained in sixth position, with the percentage of answers declining slightly from 16.9% to 16.5%. Problems related to production costs (high cost of raw materials and high cost of energy) were indicated by a higher percentage of companies and ranked 7th and 8th. It is also worth noting that the issue of exchange rate, which ranked 9th in the second quarter, has moved down to 13th place (down from 13.1% to 9.1% of answers).
18.2 21.8
High interest rates
16.5 16.9
Unfair competition Lack or high costs of raw materials
15.6 14.4 14.1 10.9
Lack or high cost of energy Difficulties with transportation logistics
12.3 9.6
Excessive red tape
11.7 10.8
Insufficient foreign demand
10.8 11.0 10.1 9.7
Competition with imported goods
9.1
Exchange rate
13.1 8.9 10.1
Lack of long-term funding Legal uncertainty
6.0 5.7
Lack or high cost of skilled labor
5.7 5.6
None
3.7 3.2
Other
3.5 3.4
Q3 2017 Q2 2017
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%.
5
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
EXPECTATIONS IN OCTOBER 2017
Expectations remain positive Expectations experienced a slowdown in October, putting an end to the upward trend in optimism. Yet, they are mostly optimistic. Entrepreneurs expect both demand and purchases of raw materials to
increase. When it comes to number of employees, however, entrepreneurs are once again expecting it to decline, albeit only moderately. Furthermore, they expect to see an increase in their foreign sales.
Expectations indices Diffusion indices (0-100 points)*
Demand
Purchases of inputs and raw materials 56.9 56.4
Increase
54.5
Increase
55.7 52.3
53.7
50
50
Decrease
Decrease
DEC
OCT 2016
FEB 2017
APR
Expected demand
JUN
AUG
OCT 2016
OCT
Dividing line
DEC
FEB 2017
APR
JUN
AUG
Expected purchases of inputs and raw materials
Number of employees
Exports
Increase
Increase
53.2
49.7
OCT
Dividing line
52.9
49.6
50 49.4
50
50.8
52.7
52.7
49.1
47.9 Decrease
Decrease
OCT 2016
DEC
FEB 2017
APR
Expected number of employees
JUN
AUG
OCT 2016
OCT
Dividing line
DEC
FEB 2017
Expected exports
* The indicators range from 0 to 100. Figures above 50 indicate an expected increase.
6
APR
JUN
AUG
Dividing line
OCT
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
Investment intentions hold steady The investment intentions index held virtually steady as it grew by only 0.2 points between September and October to 49.6 points. Nevertheless, this result led the index to hit its highest level since February 2015. The index is up by 6.1 points from October 2016. The index series began in November 2013 and reached its highest point in January 2014, when it amounted to 61.5 points.
Investment intentions Diffusion indices (0-100 points)*
55
52.1 51
49.6
47
43
39
OCT 2014
FEB 2015
JUN
OCT
FEB 2016
JUN
OCT
FEB 2017
JUN
OCT
* The index ranges from 0 to 100 points. The higher the index, the more likely industry is to invest.
RESULTS Main problems TOTAL II-17
SMALL
III-17
II-17
MEDIUM
III-17
II-17
LARGE
III-17
II-17
III-17
%
%
Ranking
%
%
Ranking
%
%
Ranking
%
%
Ranking
High tax burden
45.2
45.2
1
46.0
44.4
1
47.5
45.5
1
43.7
45.4
1
Insufficient domestic demand
39.0
36.6
2
35.4
32.1
2
40.7
33.7
2
39.8
40.3
2
High interest rates
21.9
21.0
3
29.5
26.4
3
19.7
20.5
3
19.2
18.5
3
Client delinquency
18.9
18.5
4
22.0
22.4
5
22.7
20.4
4
15.3
15.6
5
Lack of working capital
21.8
18.2
5
21.9
17.1
6
21.1
19.7
5
22.2
18.0
4
Lack or high costs of raw materials
16.9
16.5
6
24.3
25.3
4
19.7
19.4
6
11.8
10.7
13
Unfair competition
14.4
15.6
7
15.2
15.1
8
16.8
18.5
7
12.7
14.4
6
Exchange rate
10.9
14.1
8
14.5
17.0
7
12.2
15.2
8
8.4
12.0
10
Lack or high cost of energy
9.6
12.3
9
6.0
8.4
13
8.5
11.9
9
12.0
14.4
6
Excessive red tape
10.8
11.7
10
12.2
12.0
9
11.0
11.6
10
10.0
11.7
11
Lack of long-term funding
11.0
10.8
11
11.0
11.4
10
9.7
8.8
12
11.6
11.5
12
Insufficient foreign demand
9.7
10.1
12
7.2
6.9
14
9.5
8.0
13
11.0
12.7
9
Difficulties with transportation logistics
13.1
9.1
13
5.1
3.0
17
9.3
6.1
15
19.0
13.6
8
Competition with imported goods
10.1
8.9
14
8.4
8.6
12
10.7
9.8
11
10.6
8.6
14
Legal uncertainty
5.7
6.0
15
5.3
5.4
15
6.3
6.8
14
5.5
5.9
15
Lack or high cost of skilled labor
5.6
5.7
16
7.9
8.8
11
4.7
4.4
16
4.9
4.9
16
Other
3.2
3.7
17
3.3
3.4
16
4.0
4.1
17
2.7
3.6
17
None
3.4
3.5
-
3.7
2.8
-
3.3
3.5
-
3.3
3.9
-
ITENS
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%.
7
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
Performance of industry NUMBER OF EMPLOYEES EVOLUTION
PRODUCTION EVOLUTION
CAPACITY UTILIZATION (%)
ACTUAL-USUAL CAPACITY UTILIZATION
INVENTORIES LEVELS EVOLUTION
ACTUAL-PLANNED INVENTORIES
Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17
Total
45.8
54.8
48.1
46.5
49.1
49.0
66
67
66
37.1
43.4
41.8
49.7
49.5
49.6
49.6
50.0
50.7
BY INDUSTRIAL ACTIVITY Mining and quarrying
47.1
52.9
44.0
44.3
48.6
46.4
70
72
69
39.5
44.7
41.7
51.2
54.8
49.0
47.2
52.4
50.7
Manufacturing 45.8
54.9
48.2
46.6
49.2
49.1
66
67
66
37.0
43.3
41.7
49.7
49.3
49.7
49.6
49.9
50.7
BY COMPANY SIZE Small1
43.6
50.7
47.3
44.6
47.9
47.3
59
60
59
35.8
41.7
39.7
45.8
46.6
47.2
44.4
45.2
47.3
Medium2
45.4
53.5
47.4
45.4
47.8
47.8
63
65
64
35.7
42.4
39.8
48.4
48.5
48.1
49.6
49.6
49.3
Large3
47.2
57.5
48.9
48.1
50.4
50.5
71
72
71
38.5
44.7
43.8
52.4
51.4
51.6
52.1
52.6
53.2
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
III 2016
II 2017
III 2017
III 2016
II 2017
III 2017
III 2016
II 2017
III 2017
III 2016
II 2017
III 2017
36.4
38.7
41.8
59.3
56.2
59.6
41.5
44.0
45.5
30.5
34.1
35.5
BY INDUSTRIAL ACTIVITY Mining and quarrying
36.1
38.0
43.9
56.5
54.1
60.2
42.4
43.4
46.6
35.1
37.1
38.6
Manufacturing
36.3
38.7
41.8
59.4
56.3
59.6
41.4
44.0
45.4
30.4
34.0
35.3
BY COMPANY SIZE Small1
33.1
35.2
37.5
60.0
58.0
60.2
36.6
38.0
40.0
27.1
30.3
32.8
Medium2
34.3
35.9
38.6
59.6
55.0
60.8
38.8
41.1
42.5
27.8
30.2
32.6
Large3
39.1
41.8
45.7
58.7
55.9
58.7
45.3
48.5
49.8
33.6
38.1
38.4
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.
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Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
Industrial expectations DEMAND
Total
EXPORTS VOLUMES
PURCHASES OF RAW MATERIALS
NUMBER OF EMPLOYEES
INVESTMENT INTENTIONS*
Oct/16
Sep/17
Oct/17
Oct/16
Sep/17
Oct/17
Oct/16
Sep/17
Oct/17
Oct/16
Sep/17
Oct/17
Oct/16
Sep/17
Oct/17
52.3
56.9
55.7
50.8
52.7
52.9
49.7
54.5
53.2
46.0
49.6
49.1
43.5
49.4
49.6
BY INDUSTRIAL ACTIVITY Mining and quarrying
48.2
50.6
49.4
48.8
52.8
53.8
45.6
47.7
48.9
42.3
46.0
45.7
41.1
53.3
52.2
Manufacturing
52.5
57.1
55.9
51.0
52.6
52.8
49.8
54.7
53.4
46.1
49.6
49.1
43.6
49.2
49.6
BY COMPANY SIZE Small1
50.1
55.7
53.6
47.5
48.3
50.5
48.1
53.4
51.6
45.3
48.7
47.9
31.6
37.3
37.7
Medium2
51.7
56.3
54.8
50.5
54.0
53.0
49.5
54.2
52.5
46.1
49.6
48.4
37.8
44.7
44.9
Large3
53.7
57.8
57.2
52.5
54.2
54.0
50.5
55.2
54.4
46.3
50.0
50.0
52.4
57.8
58.0
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.
Technical specifications Sample profile: 2,482 enterprises, including 1,004 small, 888 medium and 590 large companies. Data collection period: October 2-17, 2017.
i
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INDUSTRIAL SURVEY | English version of “Sondagem Industrial - setembro 2017” | 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 | Customer Service - Phone: +55 (61) 3317-9992 – email: [email protected] | This publication may be copied, provided that the source is mentioned.
20 YEARS
INDUSTRIAL SURVEY Industry continues on recovery path The September issue of the Industrial Survey shows that industry continued to post the same positive results seen in July and August. As in August, number of employees remained virtually stable, showing that the layoff cycle in industry is coming close to an end. As is usual for the period, production declined in the month. The rate of decline in September 2017, however, is lower than in previous years. The indicator of actual-usual capacity utilization decreased by 1.6 points between August and September, but is still above (4.7 points) the figure registered in September 2016.
situation in general, but their dissatisfaction continues to decline. Access to credit remains difficult, but the trend in the indicator shows a reduction in these difficulties. Among major problems faced in the quarter, lack of demand is still in second place in the ranking – trailing only behind the item ‘high tax burden’ – but continues to lose importance. In addition, the expectation indices showed a slowdown in October. Prospects remain favorable, but the result for the month brought the uptrend in optimism to a halt. Investment intentions continued on the upward trend seen in previous months, but held steady in October.
It is worth noting that the quarterly data show that financial conditions keep improving. Entrepreneurs are still dissatisfied with their profit margins and financial
Actual-usual activity capacity utilization Diffusion index (0-100 points)
Above the usual
50
Below the usual
Actual-usual capacity utilization
41.8
37.1
33.8
SEP 2014
MAR 2015
SEP
MAR 2016
SEP
1
MAR 2017
SEP
Dividing line The index ranges the 0 to 100 points. Figures below 50 points indicate that capacity utilization is below usual levels for the month. The further below 50 points, the greater the distance between actual and usual levels.
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
PERFORMANCE OF INDUSTRY IN SEPTEMBER 2017
Production falls less strongly The production index stood at 48.1 points in September. Albeit below the 50-point dividing line, the index is higher than that recorded in 2015 and 2016. This is to say that the decline in production between August and September was less pronounced in 2017 than in the same period in previous years.
The index of number of employees in turn remained practically stable as it reached 49.0 points in September (down from 49.1 points in August). Since the indicator remained close to the dividing line, it indicates that employee numbers held virtually steady in the month.
Production in September (2011-2017) Diffusion index (0-100 points)
Decrease
50.2
50
49.7
49.1
48.1 47.1 Increase
45.8 42.0 2011
2012
2013
2014
Production
2015
2016
2017
Dividing line
The index varies in the 0-100 interval. Figures above 50 points indicate a month-over-month increase in production.
Capacity utilization remains at very low levels Industrial activity is still significantly below usual levels. The indicator measuring actualusual capacity utilization levels fell by 1.6 points to 41.8 points. The index is one percentage point higher than the figure recorded in September 2015 and 2016, but remains far short of the 50-point dividing line between below and above usual activity levels for the month.
2
The average capacity utilization rate reached 66% in September. The indicator is down by one percentage point from August and at the same level as the figure recorded in the same month in 2015 and 2016.
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
Average capacity utilization rate Percentage (%)
76 74 2011
72
2012
70
2013
68
2014 2015
66 66% Sep/17
64
2016 2017
62
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Small inventory excess The inventory index remained close to the dividing line at 49.6 points, showing that inventory levels held steady from August to September. The index measuring actual-planned inventory levels in
turn increased by 0.7 points to 50.7 points. As a result, the index drifted slightly away from the dividing line, indicating that inventories are slightly above the levels planned by companies.
Inventory levels and actual-planned inventory levels Diffusion indices (0-100 points)*
Increase/ above planned level
49.9
50
50.1
50.3
50.9 50.4
50.9
51.1 50.7
50.7 51.0 50.1
49.9
49.8
49.7
49.4
49.5
49.6
AUG
SEP
49.1
49.0 Decrease/ under planned level
50.0
48.3
46.5 SEP 2016
OCT
NOV
DEC
JAN 2017 Evolution
FEB
MAR
APR
Dividing line
MAY
JUN
JUL
Actual-planned
* Figures above 50 points indicate an increase in inventory levels or higher-than-planned actual inventories.
3
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
FINANCIAL CONDITIONS OF INDUSTRY IN THE 3 RD QUARTER OF 2017
Financial conditions are recovering The index measuring satisfaction with financial conditions and profits remain below 50 points, indicating that companies are dissatisfied with their financial situation. Nevertheless, it is worth stressing that both indices are up for the sixth consecutive quarter, indicating that companies’ financial conditions are on a recovery path. The index measuring satisfaction with profits reached 41.8 points in the third quarter of 2017, up by 3.1 points from the figure observed in the previous quarter and by 5.4 points from the level recorded in the third quarter of 2016.
Satisfaction with profits and financial situation Diffusion index (0-100 points)
Satisfaction 50 Dissatisfaction
45.5 41.8
The index of satisfaction with financial conditions stood at 45.5 points in the third quarter, up by 1.5 points from the previous quarter and by 4 points from the same quarter in 2016.
III-14
I-15
III-15
I-16
Financial situation
III-16
Profits
I-17
III-17
Dividing line
The indicators range from 0 to 100. Figures above 50 points indicate satisfaction with profit margins and financial conditions.
Access to credit remains difficult The index measuring ease of access to credit has been on a recovery path for five quarters. Yet, it remains below the 50-point dividing line at 35.5 points, indicating that companies are still facing greater-than-usual difficulties to access credit. The index grew by 1.4 points as compared to the previous quarter and by 5 points as compared to the same quarter in 2016.
Ease of access to credit Diffusion index (0-100 points)
Easy 50 Difficult
35.5
III-14
I-15
III-15
I-16
Ease of access to credit
III-16
I-17
III-17
Dividing line
The indicators range from 0 to 100. Figures above 50 points indicate easier access to credit.
4
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
PROBLEMS FACED BY INDUSTRY IN THE 3 RD QUARTER OF 2017
Lack of demand loses importance, but continues to rank second among major problems facing companies In the third quarter of 2017, a high tax burden is still the number one problem faced by industry. The issue was indicated by 45.2% of companies, a figure identical to that seen last quarter. Insufficient domestic demand continues to rank second among major problems, but the percentage of companies indicating the issue keeps falling. In the third quarter, the percentage of responses fell to 36.6% from 39% in the previous quarter and from 40.4% in the first quarter.
Main problems faced by industry in the 3RD quarter of 2017 Percentage (%) 45.2 45.2
High tax burden 36.6 39.0
Insufficient domestic demand 21.0 21.9
Client delinquency
18.5 18.9
Lack of working capital
Ranking third is the issue of client delinquency, with 21.0% of answers. The percentage of companies indicating this problem reached 24.7% in the fourth quarter of 2016 and has been falling steadily since then. Despite the decline in the number of companies indicating the item ‘lack of working capital,’ it surpassed the issue of high interest rates and is now ranking fourth among major problems with 18.5% of answers. The issue of high interest rates, which has also been indicated by an even smaller number of companies, ranked fifth with 18.2% of responses. In the fourth quarter of 2016, 27.9% of companies had indicated this problem. Unfair competition, which had been indicated by an increasing percentage of companies for six quarters, remained in sixth position, with the percentage of answers declining slightly from 16.9% to 16.5%. Problems related to production costs (high cost of raw materials and high cost of energy) were indicated by a higher percentage of companies and ranked 7th and 8th. It is also worth noting that the issue of exchange rate, which ranked 9th in the second quarter, has moved down to 13th place (down from 13.1% to 9.1% of answers).
18.2 21.8
High interest rates
16.5 16.9
Unfair competition Lack or high costs of raw materials
15.6 14.4 14.1 10.9
Lack or high cost of energy Difficulties with transportation logistics
12.3 9.6
Excessive red tape
11.7 10.8
Insufficient foreign demand
10.8 11.0 10.1 9.7
Competition with imported goods
9.1
Exchange rate
13.1 8.9 10.1
Lack of long-term funding Legal uncertainty
6.0 5.7
Lack or high cost of skilled labor
5.7 5.6
None
3.7 3.2
Other
3.5 3.4
Q3 2017 Q2 2017
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%.
5
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
EXPECTATIONS IN OCTOBER 2017
Expectations remain positive Expectations experienced a slowdown in October, putting an end to the upward trend in optimism. Yet, they are mostly optimistic. Entrepreneurs expect both demand and purchases of raw materials to
increase. When it comes to number of employees, however, entrepreneurs are once again expecting it to decline, albeit only moderately. Furthermore, they expect to see an increase in their foreign sales.
Expectations indices Diffusion indices (0-100 points)*
Demand
Purchases of inputs and raw materials 56.9 56.4
Increase
54.5
Increase
55.7 52.3
53.7
50
50
Decrease
Decrease
DEC
OCT 2016
FEB 2017
APR
Expected demand
JUN
AUG
OCT 2016
OCT
Dividing line
DEC
FEB 2017
APR
JUN
AUG
Expected purchases of inputs and raw materials
Number of employees
Exports
Increase
Increase
53.2
49.7
OCT
Dividing line
52.9
49.6
50 49.4
50
50.8
52.7
52.7
49.1
47.9 Decrease
Decrease
OCT 2016
DEC
FEB 2017
APR
Expected number of employees
JUN
AUG
OCT 2016
OCT
Dividing line
DEC
FEB 2017
Expected exports
* The indicators range from 0 to 100. Figures above 50 indicate an expected increase.
6
APR
JUN
AUG
Dividing line
OCT
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
Investment intentions hold steady The investment intentions index held virtually steady as it grew by only 0.2 points between September and October to 49.6 points. Nevertheless, this result led the index to hit its highest level since February 2015. The index is up by 6.1 points from October 2016. The index series began in November 2013 and reached its highest point in January 2014, when it amounted to 61.5 points.
Investment intentions Diffusion indices (0-100 points)*
55
52.1 51
49.6
47
43
39
OCT 2014
FEB 2015
JUN
OCT
FEB 2016
JUN
OCT
FEB 2017
JUN
OCT
* The index ranges from 0 to 100 points. The higher the index, the more likely industry is to invest.
RESULTS Main problems TOTAL II-17
SMALL
III-17
II-17
MEDIUM
III-17
II-17
LARGE
III-17
II-17
III-17
%
%
Ranking
%
%
Ranking
%
%
Ranking
%
%
Ranking
High tax burden
45.2
45.2
1
46.0
44.4
1
47.5
45.5
1
43.7
45.4
1
Insufficient domestic demand
39.0
36.6
2
35.4
32.1
2
40.7
33.7
2
39.8
40.3
2
High interest rates
21.9
21.0
3
29.5
26.4
3
19.7
20.5
3
19.2
18.5
3
Client delinquency
18.9
18.5
4
22.0
22.4
5
22.7
20.4
4
15.3
15.6
5
Lack of working capital
21.8
18.2
5
21.9
17.1
6
21.1
19.7
5
22.2
18.0
4
Lack or high costs of raw materials
16.9
16.5
6
24.3
25.3
4
19.7
19.4
6
11.8
10.7
13
Unfair competition
14.4
15.6
7
15.2
15.1
8
16.8
18.5
7
12.7
14.4
6
Exchange rate
10.9
14.1
8
14.5
17.0
7
12.2
15.2
8
8.4
12.0
10
Lack or high cost of energy
9.6
12.3
9
6.0
8.4
13
8.5
11.9
9
12.0
14.4
6
Excessive red tape
10.8
11.7
10
12.2
12.0
9
11.0
11.6
10
10.0
11.7
11
Lack of long-term funding
11.0
10.8
11
11.0
11.4
10
9.7
8.8
12
11.6
11.5
12
Insufficient foreign demand
9.7
10.1
12
7.2
6.9
14
9.5
8.0
13
11.0
12.7
9
Difficulties with transportation logistics
13.1
9.1
13
5.1
3.0
17
9.3
6.1
15
19.0
13.6
8
Competition with imported goods
10.1
8.9
14
8.4
8.6
12
10.7
9.8
11
10.6
8.6
14
Legal uncertainty
5.7
6.0
15
5.3
5.4
15
6.3
6.8
14
5.5
5.9
15
Lack or high cost of skilled labor
5.6
5.7
16
7.9
8.8
11
4.7
4.4
16
4.9
4.9
16
Other
3.2
3.7
17
3.3
3.4
16
4.0
4.1
17
2.7
3.6
17
None
3.4
3.5
-
3.7
2.8
-
3.3
3.5
-
3.3
3.9
-
ITENS
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%.
7
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
Performance of industry NUMBER OF EMPLOYEES EVOLUTION
PRODUCTION EVOLUTION
CAPACITY UTILIZATION (%)
ACTUAL-USUAL CAPACITY UTILIZATION
INVENTORIES LEVELS EVOLUTION
ACTUAL-PLANNED INVENTORIES
Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17 Sep/16 Aug/17 Sep/17
Total
45.8
54.8
48.1
46.5
49.1
49.0
66
67
66
37.1
43.4
41.8
49.7
49.5
49.6
49.6
50.0
50.7
BY INDUSTRIAL ACTIVITY Mining and quarrying
47.1
52.9
44.0
44.3
48.6
46.4
70
72
69
39.5
44.7
41.7
51.2
54.8
49.0
47.2
52.4
50.7
Manufacturing 45.8
54.9
48.2
46.6
49.2
49.1
66
67
66
37.0
43.3
41.7
49.7
49.3
49.7
49.6
49.9
50.7
BY COMPANY SIZE Small1
43.6
50.7
47.3
44.6
47.9
47.3
59
60
59
35.8
41.7
39.7
45.8
46.6
47.2
44.4
45.2
47.3
Medium2
45.4
53.5
47.4
45.4
47.8
47.8
63
65
64
35.7
42.4
39.8
48.4
48.5
48.1
49.6
49.6
49.3
Large3
47.2
57.5
48.9
48.1
50.4
50.5
71
72
71
38.5
44.7
43.8
52.4
51.4
51.6
52.1
52.6
53.2
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
III 2016
II 2017
III 2017
III 2016
II 2017
III 2017
III 2016
II 2017
III 2017
III 2016
II 2017
III 2017
36.4
38.7
41.8
59.3
56.2
59.6
41.5
44.0
45.5
30.5
34.1
35.5
BY INDUSTRIAL ACTIVITY Mining and quarrying
36.1
38.0
43.9
56.5
54.1
60.2
42.4
43.4
46.6
35.1
37.1
38.6
Manufacturing
36.3
38.7
41.8
59.4
56.3
59.6
41.4
44.0
45.4
30.4
34.0
35.3
BY COMPANY SIZE Small1
33.1
35.2
37.5
60.0
58.0
60.2
36.6
38.0
40.0
27.1
30.3
32.8
Medium2
34.3
35.9
38.6
59.6
55.0
60.8
38.8
41.1
42.5
27.8
30.2
32.6
Large3
39.1
41.8
45.7
58.7
55.9
58.7
45.3
48.5
49.8
33.6
38.1
38.4
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.
8
Industrial Survey ISSN 1676-0212 • Year 20 • Number 9 • September 2017
Industrial expectations DEMAND
Total
EXPORTS VOLUMES
PURCHASES OF RAW MATERIALS
NUMBER OF EMPLOYEES
INVESTMENT INTENTIONS*
Oct/16
Sep/17
Oct/17
Oct/16
Sep/17
Oct/17
Oct/16
Sep/17
Oct/17
Oct/16
Sep/17
Oct/17
Oct/16
Sep/17
Oct/17
52.3
56.9
55.7
50.8
52.7
52.9
49.7
54.5
53.2
46.0
49.6
49.1
43.5
49.4
49.6
BY INDUSTRIAL ACTIVITY Mining and quarrying
48.2
50.6
49.4
48.8
52.8
53.8
45.6
47.7
48.9
42.3
46.0
45.7
41.1
53.3
52.2
Manufacturing
52.5
57.1
55.9
51.0
52.6
52.8
49.8
54.7
53.4
46.1
49.6
49.1
43.6
49.2
49.6
BY COMPANY SIZE Small1
50.1
55.7
53.6
47.5
48.3
50.5
48.1
53.4
51.6
45.3
48.7
47.9
31.6
37.3
37.7
Medium2
51.7
56.3
54.8
50.5
54.0
53.0
49.5
54.2
52.5
46.1
49.6
48.4
37.8
44.7
44.9
Large3
53.7
57.8
57.2
52.5
54.2
54.0
50.5
55.2
54.4
46.3
50.0
50.0
52.4
57.8
58.0
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.
Technical specifications Sample profile: 2,482 enterprises, including 1,004 small, 888 medium and 590 large companies. Data collection period: October 2-17, 2017.
i
Learn more For more information on the survey, including historical series and methodology, kindly visit: www.cni.org.br/e_sondindustrial
INDUSTRIAL SURVEY | English version of “Sondagem Industrial - setembro 2017” | 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 | Customer Service - Phone: +55 (61) 3317-9992 – email: [email protected] | This publication may be copied, provided that the source is mentioned.
