Brazil's March Industry Output Rises the Most in Over Two Yearsby
March performance follows worst monthly plunge in over 3 years
Industry confidence near all-time low, weighing on results
Brazil’s industrial output jumped in March the most in more than two years, partially offsetting a decline in the previous month that was the worst since 2013.
Production rose 1.4 percent in March after a revised 2.7 percent plunge in February, the national statistics agency said Tuesday. That was below the median 1.5 percent gain forecast by 39 economists surveyed by Bloomberg. From a year earlier, industrial production fell 11.4 percent, and it’s been more than two full years since Brazil recorded year-on-year growth.
The industrial sector of Latin America’s largest economy suffered as interest rates climbed to their highest level in nearly a decade and a sprawling corruption scandal culminated in an impeachment process against President Dilma Rousseff. With inflation finally starting to slow, the market is betting lower interest rates are in store and that a new administration would push through business-friendly measures. Still, industry confidence has yet to show significant improvement from its record low.
Output of capital goods in March, a barometer of investment, rose 2.2 percent after a revised 0.5 percent increase the previous month, the statistics institute said. Production of consumer goods climbed 3.2 percent, driven higher by food products which rose 4.6 percent, offsetting declines in January and February.
Brazil’s economy shed more than 1.85 million formal jobs in the 12 months through March, the most ever for a yearlong period since the series’ inception. Sixty percent of that loss stemmed from the mining, manufacturing and civil construction sectors. As such, the gain for industry registered in March may be short-lived.
Following an uptick in March, the Purchasing Managers’ Index for manufacturing in April plunged to its lowest level in more than seven years, because“the escalation in the country’s political crisis in recent months has stoked a further deterioration in business conditions,” Capital Economics’ chief emerging markets economist Neil Shearing wrote in a note Monday.