Worst in 6 years: 27% of Brazil’s Companies Plan to Cut Jobs

    The projections made by the Brazilian industry for new job offerings in Brazil, in the first quarter of 2006, are the worst since January, 2000.

    This information is included in the 158th Survey of Manufacturing Industries, released Wednesday, February 1st, by the Getúlio Vargas Foundation’s Brazilian Economics Institute (IBRE/FGV).

    According to the study, 27% of the companies interviewed plan to reduce their current number of employees, while 16% intend to hire new workers. The difference, -11 percentage points, represents the poorest result since January, 2000.

    The study also revealed prospects of a slowdown in industrial activity in the first quarter, judging by what the sector plans to order.

    38% of the companies expressed their intention to purchase more production inputs on the domestic market, as against 30% that intend to cut back their purchases. In the first quarter of last year, these percentages were 36% and 24%, respectively.

    The outlook for orders placed abroad is even more discouraging: 34% of the companies said they plan to buy more abroad, down from the 39% that expressed this intention last year at the same time. Those who plan to buy less, on the other hand, rose from 12% in the first quarter of 2005 to 30% in the present quarter.

    When it comes to the prices of their products, 28% of the industrialists interviewed said they intend to raise them, the same percentage as in October.

    The percentage of those who plan to reduce their prices decreased from 13% to 11%. This result, according to the IBRE, "suggests that there will be no pressure on wholesale prices in the first quarter."

    The survey also shows that the evaluation made by entrepreneurs about business prospects for the next six months is more positive than it was last October, but "it is still far from constituting a wave of optimism with regard to the first half of 2006," the IBRE judges.

    Of the 914 companies included in the survey, 50% believe that business will pick up in the coming months, as against 9% that expect it to get worse. The corresponding figures for January, 2005, were 60% and 4%, respectively.

    Agência Brasil

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