(Adds analyst comment, construction data, policy context)
By Hugh Bronstein and Julia Symmes Cobb
BUENOS AIRES, May 31 (Reuters) - Argentina’s industrial output contracted a sharper than expected 6.7 percent in April compared with the same month last year, the country’s newly revamped Indec statistics agency said on Tuesday, punctuating the effect of recent fiscal austerity measures.
The market had expected a 4.0 percent contraction, according to a Reuters poll of analysts.
It was the first industrial output data released since President Mauricio Macri took office in December. Macri shut down the publishing of economic data while revamping the country’s statistics agency, which had long been accused of publishing inaccurate numbers under the previous government.
The center-right leader won office promising to stoke investment by tackling the wide fiscal deficits left by his predecessor Cristina Fernandez, a free-spending populist who harnessed the economy with heavy currency and trade controls during her eight years in power.
Macri has cut thousands of government jobs, lowered energy subsidies and allowed the currency to float, prompting the peso to weaken by 30 percent, which in turn increases inflation.
He also ditched agricultural export taxes and other controls, winning plaudits from investors and farmers while incurring the wrath of labor unions.
“The increases in inflation, coupled with the devaluation obviously generates impoverishment for the population in real terms, in terms of purchasing capacity, and that affects industrial production,” said Alberto Bernal, chief market strategist at U.S.-based XP Securities.
“This will be a lost year for Argentina,” he added.
Indeed construction activity fell 24.1 percent year on year in April, the statistics agency said.
Industrial output rose 1.5 percent in January versus a year earlier, Indec said in a statement. Production rose 0.2 percent in February and fell 3.8 percent in March.
In the first four months of the year, Indec said industrial production fell 2.4 percent. (Reporting by Walter Bianchi and Hernan Nessi; editing by Sandra Maler and Chizu Nomiyama)