UPDATE 1-Brazil industry takes small step back in March

miércoles 7 de mayo de 2014 08:54 GYT

(Add details from IBGE report, context)
    By Asher Levine
    SAO PAULO, May 7 (Reuters) - Brazilian industrial output
fell in March as higher credit costs and rising inventories
contributed to a drop in capital goods and auto production.
    Industrial production in Brazil fell 0.5 percent
in March from February, government statistics agency IBGE said
on Wednesday, beating expectations for a 2.45 percent decline in
a Reuters survey of 28 analysts. 
    The number represents a step back for Brazilian industry
following January's 2.2 percent gain and February's stable
numbers. It is also typical of the start-stop pattern seen in
the indicator for over a year. 
    Economists have been particularly worried about the recent
increase in unwanted inventories brought about by January's rise
from December. 
    Capital goods production fell 3.6 percent in March from
February, down from a 2.8 percent gain in February from January.
    Many of the figures from previous months were revised in
March following a change in the indicator's methodology.
    Manufacturers have consistently been the weakest link in
Brazil's economy as they struggle with competition from abroad,
high tax and labor costs, and poor infrastructure.
    Industrial production is expected to grow just 1.21 percent
in 2014, less than the 1.63 percent expansion forecast for
Brazil's economy as a whole, according to a weekly central bank
poll of about 100 economists. 
    Of the 24 industrial sectors surveyed by IBGE, 14 shrank in
March from February, including equipment, machinery and foods.
    Automobile production retreated 2.9 percent following a
two-month, 12.4 percent gain. 
    In broader industrial categories, both consumer and
intermediate goods rose 0.1 percent from February.
    March's industrial production fell 0.9 percent from a year
earlier, while the median estimate in the Reuters
survey pointed to a 3.0 percent decrease. 
   (For details on the IBGE industrial output figures see: r.reuters.com/wyg29v)
 (pct change)                 Mar/Feb    Mar '14/Mar '13
 Capital goods                -3.6       -8.4
 Intermediate goods           0.1        -0.1
 Consumer goods               0.1        0.1
     Durable consumer goods   -2.5       -4.6
     Semi-durable and         0.0        1.7
 non-durable consumer goods              
 Industrial output            -0.5       -0.9
 (Additional reporting by Rodrigo Viga Gaier Editing by W Simon)