BRASILIA (Reuters) - Brazil's industrial output remained nearly steady in July, official data showed on Friday, beating expectations for a small drop as a timid recovery from recession starts to take root.

Industrial production rose 0.1 percent in July from June <BRIO=ECI> after seasonal adjustments, the fifth increase in a row, government statistics agency IBGE said. The median estimate in a Reuters poll projected a decline of 0.2 percent.

Production in July retreated 6.6 percent from a year earlier <BRIOY=ECI>, IBGE said.

A rebound in food processing after two consecutive months of slowing activity helped Brazil's industrial output stay positive in July. Production of capital goods retreated though, losing part of the gains from the first half of the year when companies started to boost spending in machinery and equipment to prepare for an imminent economic recovery.


Brazilian manufacturers have slashed nearly one-fifth of their production since 2013 as the nation fell into a deep recession. Industrial output returned to growth in the second quarter, gross domestic product data showed this week, but firms still grapple with high interest rates and inflation.

Eleven of the 24 industrial sectors surveyed reported growth in July from June, including extractive industries, electronics and metalworking. Automobile production fell.

So far this year, industrial output has shrank 8.7 percent when compared to the same period in 2015.

(Reporting by Silvio Cascione; Editing by Chizu Nomiyama)