March 7, 2013 / 12:36 PM / 5 years ago

UPDATE 2-Brazil industry recovers more than expected in January

* Output grows 2.5 pct from Dec, vs forecasts of 1.55 pct
    * Capital goods production up 8.2 pct on trucks rebound


    By Brad Haynes and Silvio Cascione
    SAO PAULO, March 7 (Reuters) - Brazilian industrial output
grew more than expected in January as government stimulus helped
create a surge in heavy truck production, fueling hopes of a
gradual economic recovery this year.
    Industrial production grew a seasonally-adjusted 2.5 percent
in January from December, government statistics
agency IBGE said on Thursday, more than the 1.55 percent
forecast in a Reuters poll. 
    The data reinforced hopes that struggling manufacturers can
recover from a 2.7 percent drop in output last year, lifting a
millstone from Brazil's fragile economy.
    Manufacturing has dragged on Brazil's economic growth in
recent years, hurt by weak global demand and structural
challenges such as rising labor costs and poor infrastructure.
    
    President Dilma Rousseff's government has attempted to
revive the sector with stimulus measures, trade barriers and tax
breaks. After a 2012 contraction economists expect industrial
output to grow 2.9 percent this year, according to the median
forecast in a central bank poll.
    January's industrial production grew 5.7 percent 
over the same month a year ago, boosted by surging capital goods
output. Production in the segment jumped 17.3 percent in January
from a year earlier after 16 straight year-on-year declines, as
the heavy truck industry rallied back from a brutal year, when
new environmental regulations wiped out demand.
    But Flavio Serrano, an economist with BES Investimentos in
Sao Paulo, said industry data from February showed truck makers
already slowing from the month before, at odds with the
acceleration usually expected in the month.
    "Although this is a positive number showing a robust
recovery at the margin, it doesn't change our outlook," Serrano
said in a telephone interview. "2013 will certainly be better
for industry than last year, but it's going to keep growing
slower than the rest of the economy, hurting overall growth."
    Of the 27 industrial sectors surveyed by IBGE, 18 expanded
in January from December, including automobile production, oil
refining and machinery and equipment manufacturing.
    In broader industrial categories, production of capital
goods rose 8.2 percent in January from December, while durable
consumer goods rose 2.5 percent and intermediate goods gained
0.9 percent.
    IBGE also revised up December's data to show a 0.2 percent
rise, from previously reported zero growth.
    
    
 (pct change)                   Jan/Dec    Jan/Jan12
                                                     
 Capital goods                        8.2        17.3
 Intermediate goods                   0.9         4.0
 Consumer goods                       1.2         4.6
     Durable consumer goods           2.5        10.3
     Semi-durable and                 0.2         3.0
 non-durable consumer goods                
                                                     
 Industrial output                    2.5         5.7

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