February 4, 2020 / 12:48 PM / 14 days ago

UPDATE 1-Brazil industrial output falls in 2019 for first time in three years

(Adds details, comment)

By Jamie McGeever

BRASILIA, Feb 4 (Reuters) - Industrial production in Brazil fell in December, government statistics agency IBGE said on Tuesday, rounding the year off on a weak note and ensuring 2019 registered the first annual decline in output for three years.

The accumulated fall in production over the course of 2019 was 1.1%, IBGE said, as output declined in two-thirds of the segments surveyed, in a year marked by domestic and overseas headwinds.

“Of the 24 activities surveyed, 16 fell during the year,” IBGE’s research manager André Macedo said in a statement. “Industrial production was affected by uncertainties abroad and the labor market at home which, although it has improved, is still affecting domestic demand.”

The 1.1% decline in output last year follows annual growth of 2.5% in 2017 and 1.0% in 2018, although the fall was far less severe than the 6.4% plunge in 2016, the last time Brazil recorded a fall in production.

Brazil’s industrial sector was widely seen as one of the economy’s weak links and a drag on growth in the first half of last year, but had started to recover in the second half. Output grew for three months in a row from August through October.

But following a 1.2% monthly fall in November, output fell 0.7% in December, IBGE said, steeper than the median forecast of a 0.5% fall projected in a Reuters poll of economists.

Capital goods production in December fell 8.8% on the month, the sharpest decline since May 2018, autos and auto equipment production fell 4.7%, and machinery and equipment output fell 7.0%, IBGE said.

The year-on-year fall in December was 1.2%, again steeper than the 0.8% drop expected in a Reuters poll.

Mining was a huge drag on output in 2019, sinking 9.7% following the Brumadinho dam disaster in January. Macedo noted that if mining was excluded from the calculations, industrial production would have risen 0.2% last year. (Reporting by Jamie McGeever, Editing by Bernadette Baum)

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