UPDATE 1-Brazilian industry grows slightly but outlook still grim
(Adds details from IBGE, quote, context) By Asher Levine RIO DE JANEIRO, Oct 2 (Reuters) - Brazilian industrial output rose for the second straight month in August, though not by enough to mark a turnaround for the country's long-suffering manufacturers. Output at factories and mines rose a seasonally adjusted 0.7 percent in August from July, statistics agency IBGE said on Thursday, surpassing expectations of a 0.1 percent gain in a Reuters survey of 25 analysts. The increase was identical to July's advance, which came after five straight months of declines. Still, the numbers were not enough to spark optimism that Brazilian industry is finally turning around after years of mediocre performance caused by tougher competition from abroad, poor infrastructure at home, and high tax and labor costs. "It's an improvement from a low base of comparison. The two months don't even make up for the 1.6 percent decline we had in June," said Andre Macedo, an economist with IBGE. "We need a more consistent shift. The data compared to last year are still very bad." August industrial production was down 5.4 percent from a year earlier, slightly better than the 5.7 percent decline forecast in the Reuters poll. Brazil's economy entered a recession in the first half of the year, primarily due to a contraction in the manufacturing sector despite a string of tax breaks and other government subsidies. Industrial output is expected to drop 1.95 percent in 2014 according to a central bank poll of economists released Monday, weaker than the 1.7 percent yearly decline forecast just a month ago. If industry continues to struggle it will weigh more heavily on employment, currently one of the brightest aspects of Brazil's economy, many analysts say. Capital goods production remained unchanged in August from July, while intermediate goods such as textiles and chemicals advanced 1.1 percent. Durable consumer goods such as furniture and home appliances dropped 3 percent. Purchasing managers' index data released on Wednesday showed Brazil's manufacturing activity returned to its weakening trend in September as the shaky economy and uncertainty over Sunday's presidential election led businesses to put off purchases of new capital goods. (For details on the IBGE industrial output figures see - in Portuguese: here) (pct change) Aug/July Aug'14/Aug'13 Capital goods 0.0 -13.4 Intermediate goods 1.1 -3.3 Consumer goods -0.8 -6.7 Durable consumer goods -3.0 -17.9 Semi-durable and -0.8 -3.1 non-durable consumer goods Industrial output 0.7 -5.4 (Reporting by Rodrigo Viga Gaier and Felipe Pontes; Writing by Asher Levine, Editing by W Simon and Chizu Nomiyama)
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