July 2, 2019 / 12:41 PM / a year ago

UPDATE 1-Brazil industrial output falls less than forecast, but sector still under pressure

(Adds detail, context)

By Jamie McGeever

BRASILIA, July 2 (Reuters) - Industrial production in Brazil fell 0.2% in May from April, led by a fall in auto production, government statistics agency IBGE said on Tuesday, although the overall decline was half the rate expected and helped spur a solid 7.1% year-on-year increase.

While the headline figures could be seen as a glimpse of encouragement that Brazilian industry is over the worst, some longer term trends still point to an underperforming sector struggling to contribute to overall economic growth.

Output in the first five months of the year fell 0.7% compared with the same period a year ago, and was 0.4% lower in the three months to May from the preceding three months. By that latter measure, industrial production has been falling since August last year, IBGE said.

Brazil’s central bank last week cut its 2019 economic growth forecast to 0.8% from 2.0%, and among the main reasons for the change was a sharp downward revision to its outlook for industrial production growth to 0.2% from 1.8%.

Among the sector highlights in May, auto vehicle production fell 2.4% from April, while mining production jumped 9.2%, partly clawing back some of the accumulated 25.6% plunge in output in the first four months of the year, IBGE said.

Among the main economic categories, semi-durable and non-durable consumer goods production fell 1.6% and durable consumer goods output fell 1.4%, IBGE said. On the upside, production of intermediate goods and capital goods rose 1.3% and 0.5%, respectively.

In the 12 months to May, output was flat, the first time since July last year it has not been falling by this measure, IBGE said. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)

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