Brazilian factories signaled a contraction in August output, and investment intentions fell to their weakest level in six years, according to the Industrial Survey released on Monday (21) by CNI, the National Confederation of Industry, the main lobby for Brazilian manufacturers. The production index fell 4.7 points from July to 46.3 points, its worst August reading since 2015, when it hit 42.7 points during a deep recession.
Below the 50-point line, the indicator points to a drop from the previous month, a move that runs against the usual pattern for August. In the past 11 years the index has fallen below that line in August only twice, in 2025 and now in 2026, the CNI said. The monthly survey polled 1,403 companies, 587 small, 487 medium and 329 large, between September 1 and 11.
Investment plans weakest since the pandemic
The investment intention index fell 1.3 points in September, to 51.3 points from 52.6, its lowest since August 2020, at the height of the Covid-19 pandemic. It was the fourth straight decline: since May the indicator has lost 3.5 points. "The sharp drop in investment intentions reflects a loss of pace in industrial activity that we have been following. On top of that, uncertainty has grown, which also weighed on the result," said Marcelo Azevedo, the CNI's economic analysis manager.
All four expectations indicators fell in September. Demand expectations for products dropped 1.4 points, to 51.2, and expectations for purchases of inputs and raw materials fell 0.8 point, to 50.4; both remain above 50 points, which signals growth still ahead, though slower. Expectations for exported volume (48.9 points, down 0.6) and for headcount (49.2 points, down 0.2) point to declines.
Idle capacity rises and hiring retreats
Capacity utilization fell 1 percentage point in August, to 69%, two percentage points below the historical average for the month, and the industrial employment index stood at 48.2 points, down 0.4 from July. The inventories index lost 1.5 points, to 49.5, signaling lower stocks of finished goods from July to August.
"This very atypical result reflects the continuous fall in demand for industrial goods, but also a picture of uncertainty, both external and internal. There is no denying that the proximity of the elections brings a degree of unpredictability, making companies more cautious when it comes to investing, producing and hiring." (Marcelo Azevedo, economic analysis manager at CNI)
The survey lands amid still-high interest rates: the Selic, Brazil's benchmark rate, stands at 13.75% a year after five consecutive cuts, and Brazil's real interest rate remains among the highest in the world, G1 reported. In the second quarter, GDP grew 0.5% and industry advanced 0.1%, carried by extractive industries, which grew 3.4%, according to the IBGE, the national statistics agency.
For producers, the survey points to fewer orders, rising idle capacity and postponed investment, with smaller purchases of inputs and slower hiring in the months ahead. For consumers, it points to fewer factory jobs; even so, demand expectations remain above 50 points, meaning manufacturers still expect sales to grow over the next six months, just more slowly than in August.