December 3, 2015 / 12:17 PM / 4 years ago

UPDATE 1-Brazil's industry shrinks at fastest pace in 6 years in October

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    By Silvio Cascione
    BRASILIA, Dec 3 (Reuters) - Brazilian industrial output fell
at its fastest annual rate in more than 6 years in October,
contracting by 11.2 percent and adding to evidence
that a deep recession in Latin America's largest economy has yet
to reach bottom.
    On a monthly basis, industrial production fell a
seasonally-adjusted 0.7 percent in October from September
, its fifth straight monthly contraction, government
statistics agency IBGE said on Thursday. 
    That was worse than the median forecast of a decline of 0.2
percent in a Reuters poll.
    Brazil's industrial output has fallen to 2009 levels as the
economy sinks into one of its worst recessions on record. About
1.4 million people have lost their jobs in the past year,
reducing consumer demand for manufactured goods. 
    Output dropped in 15 of 24 industrial segments on a monthly
basis, with a steep fall in oil derivatives production weighing
most heavily on the broader index. Higher activity in processed
food industries helped limit the decline, IBGE said.
    Production of durable consumer goods fell 5.6 percent in
October from September. Demand for many big-ticket items, such
as cars and home appliances, has been affected by tighter credit
conditions after the central bank raised interest rates to a
nine-year-high of 14.25 percent to curb inflation. 
    Brazil's economy has tanked because of political gridlock
complicating government efforts to shore up finances, massive
interest rate hikes to curb inflation, and China's economic
slowdown which has slashed demand for Brazilian raw materials. 
    The economy is widely expected to shrink between 3 and 4
percent this year and about 2 percent in 2016 - the longest
downturn for the South American country since the 1930s.
    Industrial output is forecast to plunge 7.5 percent this
year and 2.3 percent in 2016, according to a weekly central bank
survey of economists. 

 (Percent change)                Oct'15/Se  Oct'15/Oct
                                      p'15         '14
 Capital goods                        -1.9       -32.6
 Intermediate goods                   -0.7        -7.5
 Consumer goods                       -0.6       -12.3
     Durable consumer goods           -5.6       -28.7
     Semi-durable and                 -0.6        -7.4
 non-durable consumer goods                 
 Industrial output                    -0.7       -11.2
 (Reporting by Silvio Cascione; Editing by Mark Heinrich)
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