Brazil: Industrial production drops for a second month in a row in September
November 4, 2010
In September, industrial production fell 0.16% over the previous month in seasonally adjusted terms. The decline was virtually unchanged compared to August's 0.18% drop but was steeper than the 0.10% contraction expected by the market. Industry is showing signs of deceleration with industrial activity expanding in only one of the past six months. On an annual basis, industrial output grew 6.3% in September, down from the 8.6% expansion tallied in August. The monthly drop reflected a slowdown in important sectors, such as vehicles and food production, which fell 0.85% and 1.70%, respectively. By categories of use, the modest September reading was a result of the declining capital goods output (-2.63% month-on-month) and durable goods production (-1.29% mom), after the government withdrew fiscal stimulus measures for the acquisition of such goods. Based on the preliminary monthly figures, industrial output expanded 7.9% over the same period last year in the third quarter, which is down from the 14.3% rise recorded in the second quarter. Despite the weaker-than-expected reading, the trend continues to point upwards with the annual average growth rate jumping from 9.8% in August to 11.2% in September, further approaching the Consensus Forecast projection of an 11.6% increase in full-year 2010. In 2011, the panel expects industrial output growth to moderate to 5.2%. Consensus Forecast participants maintained their forecasts for 2010 GDP growth at 7.6% after seven consecutive upward revisions. In 2011, economic growth is expected to moderate to 4.6%, which is also unchanged from last month's estimate.