Data from May 2026 from the Brazilian Association of Machinery and Equipment Industries (Abimaq) shows that the machinery and equipment industry continues to operate in a highly fragile environment. Although there was an increase in the consumption of machinery and equipment compared to April, the sector's performance remains significantly lower than that observed a year ago. Apparent consumption reached R$ 31.1 billion in the month, recovering part of the previous drop, but still 19.5% below that recorded in May 2025. As a result, investments in machinery and equipment have accumulated a 15% contraction over the first five months of the year. The result reinforces the perception that the slowdown has ceased to be a one-off phenomenon and now reflects a more adverse economic environment for investment decision-making. The most worrying aspect is that, even after several months of decline, there are still no signs of a consistent recovery in demand.

Productive investment remains weak.

Net sales revenue totaled R$ 22.5 billion in May, registering a 1.2% decrease compared to April and a 20.4% contraction compared to the same month in 2025. Year-to-date, the decline reaches 13.9%, while over the last twelve months the drop has already reached 4.6%. These figures suggest that the sector is going through a more prolonged adjustment phase. Unlike what was observed in previous cycles, the slowdown is not concentrated in a single segment or associated with a specific shock. It reflects a broader weakening of productive investments, a consequence of the combination of high interest rates, lower economic growth, and increased business caution. The continued difficulties in the agricultural and manufacturing sectors deserve special attention. Historically, these segments account for a significant portion of the demand for capital goods. The fact that they continue to show contraction suggests that the sector's recovery may be slower than initially expected. Furthermore, domestic revenue data shows that restrictive monetary policy continues to produce significant negative effects. The 17.9% drop in domestic sales year-to-date indicates that the high cost of credit continues to limit both the renewal of production facilities and the expansion of companies' installed capacity.

Exports sustain part of the activity.

Export performance remains one of the few positive drivers for the sector in 2026. In the accumulated period from January to May, external sales grew 14.7% in dollars and 12.1% in volume, demonstrating that Brazilian industry still finds room in international markets. However, a more detailed analysis shows that this performance should be interpreted with caution. A significant part of the expansion stems from the depressed comparison base observed at the beginning of 2025, when the slowdown in US industrial activity significantly affected the demand for Brazilian machinery. Furthermore, after the strong expansion observed in April, exports fell almost 30% in May compared to the previous month, returning to a level close to US$1 billion. This volatility resulted from shipments of large-scale projects. Another limiting factor is the exchange rate. The appreciation of the real by nearly 11% significantly reduced the positive impact of exports on revenue measured in national currency. Thus, although external performance helps to cushion the slowdown in productive activity, it has not been sufficient to alter the overall trend of weakening sector revenue.

Imports slow down

One of the most relevant aspects of the 2026 data continues to be the evolution of imports. Despite the slowdown in the domestic economy, foreign purchases continue to expand their share of the Brazilian market. In the accumulated period from January to May, imports fell by 11% (values in Reais), while domestic demand contracted by 17.9%. As a result, imported equipment came to represent 48.1% of national consumption, a higher share than that observed in 2025. Once again, China plays a central role in this dynamic. Imports from the country grew, while those originating from other markets declined. This increase occurs precisely in segments that are strategic for Brazilian industry, such as logistics, construction, agriculture, and manufacturing. This indicates that the loss of competitiveness of national production goes beyond cyclical conditions and is increasingly associated with structural factors related to costs, scale, financing, and productivity.

Installed capacity, orders, and employment point to continued weakness.

Leading indicators also remain unfavorable. The level of capacity utilization fell to 78.3% in May, below that recorded in the same month of the previous year. Although the reduction is relatively small, it interrupts the stabilization observed in previous months. More worrying is the evolution of the order backlog. The indicator fell to 8.2 weeks, remaining 10.6% below the level observed in May 2025. In the year-to-date, the backlog remains 6.1% lower than in the same period last year. This behavior suggests that the weakness in revenues should persist over the next few months, since the flow of new contracts remains insufficient to sustain a more robust recovery in production. In the labor market, there was a slight improvement, with the creation of approximately 350 jobs in May. However, the advance is modest and insufficient to alter the prevailing trend of stability with a negative bias observed since the second half of 2025.

General overview: the sector faces a prolonged slowdown and increasingly structural challenges.

The May data reinforces the assessment that the machinery and equipment industry is experiencing a deeper and more persistent slowdown than initially expected. The partial recovery in apparent consumption compared to April does not alter the overall picture of declining investment in machinery and weakening activity. The sector continues to be constrained by three central factors: – Depressed domestic demand, especially in the agricultural and industrial segments; – Exports performing positively, but insufficient to compensate for internal weakness; – Continuous increase in imports, particularly of Chinese machinery, amplifying competitive pressure on domestic manufacturers. The main conclusion from the May data is that the prolonged period of high interest rates may deepen the country's investment crisis. In this context, a possible improvement in macroeconomic conditions may not be sufficient to guarantee a proportional recovery in domestic machinery and equipment production; furthermore, there is the additional risk that the future recovery in investment will be largely absorbed by imported equipment.

This text was translated by machine from Brazilian Portuguese.