SAO PAULO (Reuters) – Brazilian industry posted its third straight month of timid gains in October, though capital goods manufacturing expanded at a slower pace, suggesting that a recovery in one of the weakest parts of Brazil’s economy remains on shaky ground.
Industrial production in Brazil rose 0.6 percent in October from September, government statistics agency IBGE said on Wednesday, exceeding all estimates in a Reuters survey of 28 analysts, which ranged from a contraction of 0.5 percent to an expansion of 0.5 percent.
Brazilian industry has had a mild recovery so far in 2013, with output rising 1.6 percent in the first 10 months from the same period last year, IBGE said. Growth has come in starts and stops, however, as businesses continue to struggle with competition from abroad, high tax and labor costs, and poor infrastructure.
Even with industry expanding for three straight months, it has yet to make up for the 2.5 percent decline seen in July from June.
Data on Tuesday showed Brazil’s economy shrank 0.5 percent in the third quarter, contracting for the first time since early 2009. The industrial contribution to gross domestic product was just 0.1 percent, while investment fell by 2.2 percent from the previous three months, as stifling costs and sour business sentiment discouraged capital spending.
Capital goods production expanded 0.6 percent in October from September, down from a 4 percent monthly expansion in September and a 2.3 percent advance in August, suggesting businesses are continuing to brace for tougher times ahead.
October’s industrial production expanded 0.9 percent from a year earlier, exceeding the 0.4 percent increase forecast in the Reuters survey. Estimates ranged from a 0.8 percent increase to a 2.30 percent decrease.
After a 2.7 percent contraction in 2012, economists expect industrial output to grow 1.69 percent this year, according to the median forecast in a central bank poll. One month ago the survey forecast industrial growth of 1.77 percent.
Of the 27 industrial sectors surveyed by IBGE, 21 expanded in October from September, including machinery and equipment, oil refining and mining.
In broader industrial categories, consumer and intermediate goods both rose 0.3 percent.
IBGE also revised some data from previous months. September’s industrial growth from August was revised to 0.5 percent from 0.7 percent previously.
(Reporting by Rodrigo Viga Gaier and Felipe Pontes; Writing by Asher Levine, Editing by Gerald E. McCormick)
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