Brazil industrial output rises in January, but at slowest pace in nine months

An employee works at the SPTF metallurgical company in Sao Paulo

BRASILIA (Reuters) – Industrial production in Brazil rose in January for a ninth straight month, figures showed on Friday, but it was the slowest rate in that period, offering another indication that the wider economic recovery is losing steam.

January’s 0.4% increase in industrial output was exactly in line with the median estimate in a Reuters poll of economists, while the year-on-year rise of 2.0% was slightly below the poll forecast of 2.2% growth.

Graphic: Brazil industrial production – https://fingfx.thomsonreuters.com/gfx/mkt/rlgvdedjdpo/IPMONTH.png

Statistics agency IBGE said the main drivers were a 3.1% increase in food production, and a 1.5% rise in mining output.

Not only was the overall increase the slowest in the past nine months, IBGE also said it was spread across a far narrower range of categories and segments.

“Industry kept up its positive performance, but decelerated in January,” said IBGE survey manager Andre Macedo.

“It is also worth noting that the number of segments with a negative performance was a majority (14 of 26), something that has not been seen before in this sequence of nine months of growth,” he said.

Capital goods and consumer goods production were the only two of four major categories to record an increase in output in January, while only 11 of the 26 industry segments surveyed showed growth, IBGE said.

Purchasing managers index data show that the pace of expansion in Brazil’s manufacturing sector picked up again in February after three months of deceleration, driven by strong increases in new orders and production.

But confidence in the sector fell in February for a second consecutive month, a sign that the deadly second wave of the COVID-19 virus is taking its toll.

In the nine consecutive months of rising output, the sector grew by more than 42%, IBGE said, more than making up for the 27% contraction in March and April at the height of the COVID-19 pandemic and lockdowns.

However, Brazilian industry is still 12.9% smaller than its peak in May, 2011, IBGE said.

The central bank forecasts a 5.1% rise in industrial output this year, following last year’s 4.5% slump.

(Reporting by Jamie McGeever; Editing by Edmund Blair and Chizu Nomiyama)

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