Brazil industry rises 1.8%, but why are so many states still falling?

Brazil's industrial production rose 1.8% in January 2026 compared with December 2025, with positive results reported in seven of the fifteen locations surveyed.Pará recorded the strongest gains.Declines were concentrated in states such as Rio Grande do Sul, Espírito Santo and Ceará, while increases were registered in São Paulo, Minas Gerais and Bahia.Broader indicators pointed to a mixed regional picture and signs of slowing momentum across several parts of the country, despite the monthly increase.Regional growth led by Northern and Southeastern statesPará recorded the largest increase in January, with production rising 8.6% after four consecutive months of decline during which output had fallen 13.2%.Minas Gerais and Bahia posted growth of 3.2% and 3.0%, respectively, while São Paulo followed with a 3.5% increase. Amazonas expanded by 1.9%, the Northeast Region grew 2.0%, and Paraná reported a 1.5% increase.These results indicate that the main expanding regions grew faster than the national monthly average of 1.8%.Although the gains were uneven across the country, growth in several major industrial centers helped drive the overall national increase.Reductions in coastal and Southern areasWhile some regions recorded improvements in industrial output, others experienced notable declines.Rio Grande do Sul posted the largest drop, with production falling 4.5% in January. Ceará recorded a contraction of 2.5%, while Espírito Santo saw output decline by 4.3%.Production declined for the second consecutive month in both Rio Grande do Sul and Espírito Santo.Over the two-month period, Rio Grande do Sul recorded losses of 5.7%, while Espírito Santo posted a cumulative drop of 10.0%.Additional negative results were observed in Pernambuco (-2.0%), Santa Catarina (-1.7%), Goiás (-1.6%), Mato Grosso (-1.1%) and Rio de Janeiro (-0.1%) during the first month of 2026.Three-month average indicates a declining trendBeyond the monthly fluctuations, the industry-wide three-month moving average index fell by 0.1% in the January 2026 quarter compared with the previous month.This indicator continued the downward trend that began in October 2025.At the regional level, the three-month moving average recorded negative results in eleven of the fifteen locations surveyed.The steepest declines were seen in Goiás (-3.9%), Amazonas (-2.4%), Ceará (-2.2%), Santa Catarina (-2.1%), Bahia (-2.1%), Rio Grande do Sul (-1.9%) and Espírito Santo (-1.8%).Mato Grosso, however, recorded growth of 1.6% in January 2026, marking the strongest expansion under this measure.Limited expansion in the annual comparisonIn non-seasonally adjusted terms, Brazil's industrial sector grew by a modest 0.2% in January 2026 compared with January 2025.During this period, production increased in eight of the eighteen locations surveyed.The largest gains were recorded in Pernambuco and Espírito Santo. Pernambuco posted a 27.7% increase, while Espírito Santo registered growth of 14.5%.The expansion in Pernambuco was mainly driven by coke, petroleum products and biofuels, along with machinery and equipment, electrical materials, metallurgy, food products and chemical manufacturing.In Espírito Santo, growth was supported by stronger performance in the metallurgical and extractive industries.Other regions posting growth included Mato Grosso do Sul (8.7%), Maranhão (6.2%), Rio de Janeiro (5.6%), Mato Grosso (5.2%), Minas Gerais (2.7%) and Pará (0.5%).Paraná maintained the same level of production as in January 2025, showing no variation during the month.Sharp declines in several statesDespite positive results in some regions, several locations experienced significant contractions compared with the same month a year earlier.Rio Grande do Norte recorded the sharpest drop, with production falling 24.9%. Bahia followed with a decline of 10.3%.In Rio Grande do Norte, the contraction was largely driven by lower activity in coke, petroleum products and biofuels. In Bahia, the decline reflected weaker output in sectors linked to coke, petroleum products and biofuels, as well as machinery, equipment and electrical materials.Additional negative results were recorded in Ceará (-7.5%), Amazonas (-6.8%), Santa Catarina (-6.5%), Rio Grande do Sul (-6.5%), Goiás (-4.4%), São Paulo (-1.5%) and the Northeast Region (-0.4%).Slowing momentum in the twelve-month indicatorAs of January 2026, Brazil's industrial sector has expanded by 0.5% over the previous twelve months.Although the indicator remained positive, it showed a loss of momentum compared with earlier months.The twelve-month index recorded positive rates in eight of the eighteen locations surveyed. However, ten regions posted weaker performance compared with December 2025.Bahia saw the largest decline, moving from 0.3% to -1.0%, while Santa Catarina slowed from 3.2% to 2.0% and Rio Grande do Sul from 2.3% to 1.2%.Amazonas shifted from 0.1% to -0.4%, Ceará from -0.7% to -1.3%, and Rio Grande do Norte from -11.8% to -12.5%.Meanwhile, some regions showed improvement between December 2025 and January 2026.Pernambuco moved from -3.8% to -0.6%, Espírito Santo increased from 11.6% to 13.6%, Maranhão improved from -5.3% to -3.9%, Mato Grosso do Sul rose from -12.8% to -12.1%, and Rio de Janeiro advanced from 5.1% to 5.7%.The post Brazil industry rises 1.8%, but why are so many states still falling? appeared first on Invezz