Aug. 24 (Bloomberg) -- Argentine industrial output grew at the slowest pace in almost five years in July as energy shortages forced companies to cut back on operating hours.

Production last month made the smallest gain since November 2002, when the country was emerging from its worst financial crisis, rising 2.3 percent from the same period a year earlier. Output fell a seasonally adjusted 2.1 percent from June, the National Statistics Institute reported today in Buenos Aires after delaying release of the data by a day.

``This really shows that the industrial sector has been significantly affected by the energy crisis,'' said Alfredo Coutino, chief Latin American economist at Moody's Economy.com in West Chester, Pennsylvania. ``The crisis is taking a high toll on economic growth.''

Shortages of natural gas and electricity in June and July prompted the government to cut supplies to companies, slowing growth in South America's second biggest economy after an expansion of more than 8 percent annually since 2003. Steel production fell 26.2 percent from a year earlier while chemical and plastic production fell 3.3 percent over the same period, the institute reported.

Argentina's statistics agency, known as Indec, said ``exceptional circumstances'' linked to steel production caused the decline, citing as an example one unidentified plant where it said investments in new equipment forced the plant's closure.

Data Doubts

The reliability of Indec's figures have been questioned this year by some of its own workers and opposition leaders after President Nestor Kirchner in January replaced the head of the office that collects inflation data. Kirchner and Economy Minister Miguel Peirano have said the aim was to ``improve operations'' with personel changes.

``This release is ridiculous,'' said Cesar Moyano, a union leader at the institute in a telephone interview. ``Right now, no index is free of suspicion because of government intervention in statistics. What began with the consumer price index has now moved to the industrial index and obviously this is a process with ramifications and is getting worst.''

Indec workers clashed with police Aug. 22 as the institute was publishing its quarterly jobs report, which showed unemployment reaching an almost 15-year low of 8.5 percent.

To contact the reporter on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net.

Last Updated: August 24, 2007 18:42 EDT