September 4, 2018 / 12:50 PM / in 3 months

UPDATE 1-Brazilian industrial output shrinks less than expected in July

(Recasts throughout with details, context)

By Bruno Federowski

BRASILIA, Sept 4 (Reuters) - Brazilian industrial output contracted less than expected in July, suggesting the outlook for a slow and steady recovery remained intact despite disruptions from a countrywide truckers strike earlier in the year.

Output fell 0.2 percent from June, government statistics agency IBGE said on Tuesday, compared with the median forecast for a 1.0 percent decline, according to a Reuters poll of economists.

The industrial sector, which accounts for about 20 percent of gross domestic product (GDP), slumped in May as truckers protesting high diesel prices blocked major roadways, but bounced back in June as transportation flows normalized.

The July reading would indicate the industry’s recovery from the deepest recession in decades remained sluggish but on track, with 16 of the 26 segments tracked by IBGE expanding in the month.

Still, capital goods production dropped 6.2 percent, underscoring that uncertainty around the protests as well as unpredictable presidential elections in October are driving companies to postpone investment plans.

Industrial output rose 4.0 percent from the year before, surpassing a consensus forecast of 2.0 percent, IBGE said.

Economic growth accelerated slightly in the second quarter despite the strike, but industrial output contracted, snapping a string of three quarters of expansion. (Reporting by Bruno Federowski; Editing by Jeffrey Benkoe)

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