Brazil: Industrial production drops
August 2, 2011
In June, industrial production declined a seasonally adjusted 1.6% over the previous month, contrasting a 1.1% increase in May (previously reported: +1.3% month-on-month). The reading was well below market expectations, which had industrial production contracting 0.8%. Compared with the same period last year, industrial output expanded 0.9% (May: +2.7% year-on-year). Of the 27 categories surveyed by the Brazilian Institute of Geography and Statistics (IBGE), 20 categories registered declines in output. The largest decrease was observed in the production of semi and non-durable goods, which contracted a seasonally adjusted 2.4% over the previous month, followed by a decline in the production of capital goods (-1.9% mom). Consequently, the trend continues to point downwards, with annual average growth in industrial production falling from 4.5% in May to 3.7% in June. Weakening industrial production suggests that authorities' efforts to cool the overheating economy are beginning to produce results.