Brazil: Industrial production rebounds in September

In September, industrial production expanded 0.5% over the previous month in seasonally-adjusted terms, which contrasted the revised 3.5% contraction recorded in August (previously reported: -3.8% month-on-month). The result was slightly above expectations of a milder 0.4% increase. Behind the rebound were upturns in the production of intermediate and durable consumer goods, though a drastic drop was recorded in the output of capital goods.

In annual terms, industrial production fell 4.8%, which was a milder drop compared to the 5.0% decrease recorded in August. However, widespread declines were recorded nearly across the board with 19 of the 26 categories that the Brazilian Institute of Geography and Statistics (IBGE) surveyed recording contractions. The categories with the biggest negative impacts were the production of mining and quarrying and of coke, oil products and biofuels.

Annual average growth in industrial production improved from minus 9.3% in August to minus 8.8% in September. Brazil’s economy has sunk into the worst recession in its modern history amid low prices for key exports, high inflation, political turmoil and depressed confidence levels.

The analysts surveyed by FocusEconomics for this month’s LatinFocus Consensus Forecast see industrial production falling 5.9% in 2016, which is unchanged from last month's estimate. In 2017, industrial output is expected to grow 1.8%, which is also unchanged from the previous month’s estimate.