Brazil Factory Confidence Rises in October

BRAZIL · ECONOMY

Brazil factory confidence rose in October as industrial bosses turned less gloomy about the coming six months, a survey published on Wednesday 14 October shows. The index of the National Confederation of Industry (CNI), Brazil’s main industry lobby, climbed 1.3 points to 46.2 from 44.9 in September.

That matters to US investors and importers, since Latin America’s largest economy was hit in July by a 25% US tariff on certain goods. Readings below 50 signal a lack of confidence, and the index has now stayed under that line for 22 months in a row.

What the October Survey Shows

The CNI’s gauge of Brazil factory confidence, known in Portuguese as ICEI, runs from 0 to 100, with 50 as the dividing line. Readings above 50 signal confidence among executives, while readings below it signal a lack of confidence.

October’s reading of 46.2 compares with 47.2 a year earlier and a long-run average of 53.2 points. The index last stood above 50 in December 2024, at 50.1, so Brazilian industry has now gone 22 months without confidence.

The survey covers manufacturers, mining companies and builders, and this edition polled 1,103 firms from 1 to 7 October. Of those, 456 were small, 414 medium-sized and 233 large companies.

The headline figure blends two parts: how executives rate current conditions against the previous six months, and what they expect for the next six. Each part covers both their own company and the Brazilian economy as a whole.

Current Conditions Fall to a Six-Year Low

The current conditions index slipped 0.2 points to 40.0, its lowest level since July 2020, during the Covid-19 pandemic. The drop came from executives’ view of their own companies, which fell 0.5 points to 43.3, also the weakest since July 2020.

Their rating of the wider economy edged up 0.3 points to 33.3, which is still deep in negative territory. The CNI said that level points to an intense and widespread sense that conditions have worsened.

Marcelo Azevedo, the CNI’s economic analysis manager, blamed long-running weak demand for industrial goods plus newer shocks. “Among them, very heavy cost pressure, which choked the financial health of companies, and very high uncertainty abroad as well,” he said.

Why Expectations Turned Less Gloomy

The expectations index rose 2.1 points to 49.3, just short of the 50 line, and drove all of October’s gain in Brazil factory confidence. Pessimism about the next six months has lost intensity, the CNI said in its report.

Expectations for the Brazilian economy jumped 4.3 points to 43.4, the biggest move of the month and the highest level since November 2024. Expectations for their own companies rose 1.0 point to 52.3, a sign of growing optimism about their own business.

The survey ran during the week of the first round of Brazil’s presidential election, held on Sunday 4 October. The runoff on 25 October pits President Lula, of the left-wing Workers’ Party, against conservative senator Flávio Bolsonaro, the former president’s son.

Weak Demand, Costly Credit and a US Tariff

Other CNI data help explain why Brazil factory confidence stays low, with manufacturing revenue down 3.5% in August after a 2.2% drop in July. Factories used 76.9% of their capacity in August, down from 77.5%, Agência Brasil, the state news agency, reported on 7 October.

Credit remains expensive, even after Brazil’s central bank cut its benchmark Selic rate from 15% at the start of 2026 to 13.75% in September. A CNI survey published on 9 October found 76% of firms struggling for short- or medium-term loans cited high rates as a main barrier.

In Washington, the Office of the US Trade Representative announced a 25% tariff on certain Brazilian goods on 15 July, after a trade investigation. The duties took effect on 22 July, with goods such as coffee, beef and civil aircraft exempted, US law firm Greenberg Traurig noted.

A Shorter Work Week Adds to Costs

The October reading of Brazil factory confidence came from a survey that closed a week before the Senate approved a 40-hour week on 14 October. The constitutional amendment cuts the standard week from 44 hours and ends the 6×1 schedule of six working days for each day off.

A 40-hour week with unchanged pay would raise production costs by up to R$267.2 billion (about US$53 billion), the CNI estimates. The dollar figure is based on about 5.04 reais to the US dollar on 15 October 2026.

The CNI also expects consumer prices to rise 6.2% on average and Brazil’s economic output to be 0.7% lower. “We regret that the vote was held without more debate with Brazilian society,” said Ricardo Alban, the CNI’s president.

Lula celebrated the 75-to-1 vote as a historic gain for workers, Valor, the business daily, reported. Flávio Bolsonaro, of the conservative Liberal Party, voted in favor after changing his position, and said companies will need compensation.

What It Means for You

US investors can own Brazilian companies through American depositary receipts (ADRs), certificates that trade in New York in place of the shares. For them, Brazil factory confidence shows industry weak at present but less pessimistic about the coming six months.

US importers face the 25% tariff on certain Brazilian goods, while the CNI warns that the shorter work week will raise production costs at home. Both pressures land on companies whose bosses already rate current business at a six-year low.

For background, see Brazil’s August industrial production figures and July’s slump in industry confidence. The Senate vote itself is covered in Brazil Senate Passes 5-Day Week, 75 to 1.

What Is Not Known

The CNI did not say what drove the jump in expectations for the economy, which came in the week of the first-round vote. Its breakdown of Brazil factory confidence by industry, due on 28 October, will show which sectors gained or lost.

The October release did not single out the US tariff, so its weight in the answers is unclear. The November reading will show how executives react to the runoff result and to the vote on working hours.

The amendment still has to be promulgated by Congress, and the CNI has asked lawmakers to revisit it. Its cost estimate of up to US$53 billion is the lobby’s own projection, not an official figure.

More: Brazil news in English, every day from The Rio Times.

Frequently Asked Questions

What does Brazil’s industrial confidence index measure?

It measures how executives at manufacturers, mining companies and builders rate current conditions and their outlook for the next six months. The National Confederation of Industry publishes it every month on a scale from 0 to 100.

Why does the 50-point line matter?

Readings above 50 mean executives are confident, while readings below 50 mean they lack confidence. Brazil factory confidence has stayed below that line for 22 months, since January 2025.

Why did confidence rise if current conditions got worse?

Expectations for the next six months rose 2.1 points to 49.3, which outweighed a small fall in the current conditions index. That gauge slipped 0.2 points to 40.0, its lowest level since July 2020.

What does the survey mean for US investors?

Brazil factory confidence shows industry weak at present, squeezed by high interest rates, rising costs and a 25% US tariff on certain goods. Executives still expect their own companies to do better over the next six months.

When is the next reading?

The CNI’s breakdown of the October index by industry is due on 28 October. The November figures will show how executives react to the 25 October runoff and the shorter work week.

Sources: CNI (Agência de Notícias da Indústria), ICEI October release, 14 October 2026; CNI, ICEI October 2026 report (PDF), 14 October 2026; CNI, ICEI statistics page and recent series, 14 October 2026; CNI, statement on the shorter work week, 14 October 2026; Banco Central do Brasil, Selic target series, 15 October 2026; Office of the US Trade Representative, 15 July 2026; Tribunal Superior Eleitoral, Eleições 2026, 15 October 2026; Agência Brasil, 14 October 2026; Valor Econômico, 14 October 2026; Agência Brasil (industrial indicators), 7 October 2026; Agência Brasil (credit survey), 9 October 2026; Valor Econômico (Lula on the vote), 14 October 2026; Valor Econômico (Flávio Bolsonaro’s vote), 14 October 2026; Greenberg Traurig, 21 July 2026.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief

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