September 1, 2014 / 5:50 PM / 5 years ago

Brazil's industry probably recovered slightly in July after World Cup

Men work on the construction of a building at the Rio 2016 Olympic Games athletes village in Rio de Janeiro June 27, 2014. REUTERS/Ricardo Moraes

BRASILIA (Reuters) - Industrial output in Brazil likely edged up in July as factories tried to make up for days lost to holidays during the World Cup football tournament, a Reuters poll showed on Monday.

Output from factories and mines likely grew a seasonally-adjusted 0.5 percent in July from June BRIO=ECI, ending a four-month losing streak, the median of 20 forecasts showed.

Industrial production plunged 1.4 percent in June from May, partly because many cities declared public holidays on World Cup game days to prevent traffic problems and other logistical issues. Although the tournament lasted until mid-July, most World Cup matches took place in June.

Economists said July’s growth will probably too weak, however, to pull Brazil’s industry out of its recent slump. When compared to the same period a year before, industrial output BRIOY=ECI probably dropped 3.7 percent, according to the median of 17 forecasts.

Forecasts for the monthly result ranged from an increase of 0.9 percent to a decline of 0.5 percent, while estimates for the year-over-year decline ranged from 0.3 to 5.25 percent.

A string of problems from inflation to rising labour costs have pressure Brazil’s manufacturers, dragging business confidence down to the lowest in five years. Falling industrial output helped send Brazil’s economy into a recession in the first half of the year and has already started to cost jobs in many sectors such as automaking and food processing.

“Low competitiveness and weak demand are the main reasons behind industry’s performance and will probably continue to limit a stronger recovery in output in 2014 and 2015,” Banco Santander Brasil analysts wrote in a client note.

Brazil’s statistics agency IBGE releases the July industrial report on Tuesday at 9 a.m. local time (1300 BST).

Reporting by Silvio Cascione; Editing by Diane Craft

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