UPDATE 1-Argentina industrial sector snaps near 2-year contraction in June
(Recasts; adds details on auto sales, background)
BUENOS AIRES, July 27 (Reuters) - A rebound in the auto industry drove an expansion in Argentina's industrial sector in June, its first month of growth in nearly two years, government data showed on Monday, adding to signs of a pickup in Latin America's third largest economy.
Industrial output grew by 0.9 percent in June compared with the same month a year earlier, more than double the median forecast for a 0.4 percent gain in a Reuters poll of analysts.
The increase broke a run of 22 consecutive monthly declines that analysts have attributed to import controls preventing manufacturers from bringing in key parts from abroad as well as anemic growth among Argentina's key international trading partners.
The industrial output figures came hot on the heels of official data showing Argentine economic activity expanding at the fastest rate in 17 months in May as President Cristina Fernandez steps up spending ahead of elections in October.
A pickup of 6.8 percent in the key automobile sector drove growth among manufacturers. The ministry quoted figures from the ADEFA automobile association showing sales both at home and abroad had risen.
Economists said domestic demand for cars was likely bolstered by strong wage hikes that, together with government incentives to spend, are improving consumer confidence.
Leading firms operating in Argentina include General Motors , Ford Motor Co, Honda Motor Co Ltd, Toyota Motor Corp, Volkswagen AG, Peugeot SA and Renault SA.
Manufacturers will have to continue to contend with the myriad of state controls introduced three years ago to stem capital flight - at least until a new government comes into power toward the end of the year.
While Fernandez is ineligible to run for a third consecutive term, ruling party candidate Daniel Scioli has in recent weeks heaped praise on her economic policies while analysts say structural imbalances in the economy mean leading opposition candidate Mauricio Macri might not be able to push through change as quickly as he would like. (Reporting by Buenos Aires newsroom, writing by Sarah Marsh; editing by Richard Lough and G Crosse)
© Thomson Reuters 2017 All rights reserved.