Liésio Pereira
Reporter - Agência Brasil

São Paulo - Brazilian industrial entrepreneurs' forecasts for the next six months are the bleakest in the past two years, according to the preliminary findings of the 156th Conjunctural Survey of Manufacturing Industry, released yesterday (13) in São Paulo by the Getúlio Vargas Foundation (Ibre/FGV). Responses were obtained from 462 firms between June 28 and July 14. "On the item intended to capture perceptions regarding business prospects for the next six months, there was the highest rate of pessimistic entrepreneurs since July, 2003," the FGV analysis points out.

41% of the entrepreneurs expect their businesses to improve in the next months, while 20% foresee things getting worse. The 21 percentage points residual (the difference between the two extremes) is the smallest since July, 2003, when it was 16 percentage points. In the previous survey, referring to the month of April, the residual was 33 percentage points.

For the July-September quarter, the study revealed that, regarding production, 47% of the entrepreneurs believe there will be an increase, as against 20% who expect a reduction. The 27 percentage points residual is less than the one registered in July, 2004 (43 percentage points).

"On the items related to the operational side of the firms, the responses indicate the possibility of a slow pace of activity in the July-September quarter, although one that is still compatible with growth," the study emphasizes.

The forecasts regarding demand and production are reflected in the outlook for employment and prices. 16% of the firms said in July that they intend to hire more people, while 20% said they plan to shrink their staff. This is the first negative residual (-4 percentage points) registered by the survey since April, 2002 (when it was -8 percentage points). With respect to prices, there was a decrease in the percentage of firms that foresee higher prices, from 41% in April to 24% in July, and an increase in the percentage of those that plan to reduce prices, from 5% in April to 23% in July.

Translation: David Silberstein