UPDATE 1-Brazil industry takes small step back in March
(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)
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