* Nov industrial output falls 1 pct from year earlier
* Reverses October's 2.5 percent year-over-year gain
* Drop in automobile production weighs on numbers
By Asher Levine
SAO PAULO, Jan 4 Brazilian industrial output
shrank in November due to a slowdown in automobile production,
suggesting that a mild recovery in the manufacturing sector
Output from Brazilian factories and mines
contracted 1 percent in November from a year earlier, government
statistics agency IBGE said on Friday, falling below the 0.8
percent decline forecast in a Reuters survey.
The data follows a 2.5 percent year-over-year rise in
October, revised up from a previously reported 2.3 percent.
October's figures showed industry posting its first annual
increase in more than a year and helped make the case that
Brazil's manufacturers were beginning to emerge from more than
two years of weak growth.
"The expected industrial recovery in the second half (of
2012) is solidifying, but in a non-linear way and at a slower
pace," said Rafael Leao, an economist with Austin Rating in Sao
Leao added that Brazil's manufacturers should see stronger
growth this year, with business confidence readings still at
President Dilma Rousseff's government has attempted to boost
the sector through a series of stimulus measures, trade barriers
and tax breaks, although November's figures suggest a muted
Unemployment in Brazil was close to an all-time low in
November while real wages increased, piling additional cost
pressure on manufacturers already struggling with low
productivity, high taxes, and infrastructure bottlenecks.
"Whatever frustration with growth only increases the
likelihood that more government measures are coming that are
similar to what has already been done," said Flavio Serrano, a
senior economist with BES Investimento in Sao Paulo.
The biggest contributor to November's backtrack in
industrial output compared with the previous year was a fall in
automobile production, which makes up more than one-fifth of
Brazil's manufacturing output, IBGE said.
Car production fell 5.3 percent in November
from October, as tighter credit and cooling demand overwhelmed
the government's efforts to boost the sector.
Despite November's decline, a private report on Wednesday
reinforced views that Brazil's manufacturing sector is still
The HSBC Purchasing Managers' Index for the Brazilian
manufacturing sector fell to a seasonally adjusted
51.1 in December, from 52.2 in November, yet remained above the
50 mark that divides expansion from contraction for the third
November's industrial production contracted 0.6 percent from
October, less than the 0.9 percent drop forecast in
the survey. Estimates for the monthly drop ranged from 0.3
percent to 1.1 percent.
Growth in industrial production from October to September
was revised to 0.1 percent on Friday, down from a previously
reported 0.9 percent.
Of the 27 industrial sectors surveyed by IBGE, 16 contracted
in November from October, including mining, oil and gas drilling
and automobile production.
In broader industrial categories, output of capital goods,
which were most heavily hit during the economic slowdown, shrank
1.1 percent for the month, the IBGE said.
Worries over mediocre growth in Brazil's economy and
government intervention in the private sector have created an
uncertain business environment, leading to the decline in
capital goods investment, Serrano said.
Production of durable consumer goods and intermediate goods
both fell 1 percent from October.