FX.co ★ Brazil Factory Activity Sees Sharpest Drop Since July 2024

In December 2025, Brazil's industrial production experienced a significant decline of 1.2% compared to the previous month. This drop marks the most substantial decrease since July 2024, surpassing market predictions, which had anticipated a 0.7% decrease. The decline was widespread, impacting all four principal economic categories and affecting 17 out of the 25 sectors evaluated. Noteworthy negative contributions originated from the motor vehicles sector, which decreased by 8.7%, chemicals by 6.2%, and metallurgy by 5.4%. Nonetheless, this overall downturn was partially mitigated by increases in sectors such as coke, refined petroleum products, and biofuels, which rose by 5.4%, pharmaceuticals, with a 6.7% increase, and extractive industries, rising by 0.9%. Among the major economic categories, capital goods experienced the most significant decline, falling by 8.3%, followed by durable consumer goods, which declined by 4.4%. Despite these challenges, industrial output remained 0.6% above pre-pandemic levels, although it was still 16.3% below the peak reached in 2011. On a year-over-year basis, production saw a modest increase of 0.4%, breaking a pattern of two consecutive months of contraction.