MercoPress. South Atlantic News Agency

Brazilian July industrial output grows at lower than expected rate

Automotive production surged 32.1% over July 2009

Brazilian industrial production output experienced an increase of 0.4% in July from a month earlier, which is less than expected according to a report released by the Brazilian national statistics bureau IBGE in Río de Janeiro, compared with a 1% decline in June.

The July figure was lower than the median estimate of a 0.8% increase (forecasts were ranged between 0.2 and 1.4%) among economists and analysts surveyed. Output rose 8.7% from a year earlier.

Economists had expected a growth of 9.5%. Production rose a seasonally adjusted 0.4% month-on-month compared to 0.8% growth expected by economists. Year-on-year, production in capital goods industries climbed 21.1%.

Output of intermediate goods rose 11.3% annually while production of automotive vehicles surged 32.1% compared to the same month last year.

During the first seven months of the year, production grew 15% over the same period last year and was less than the 16.2% growth recorded in the first half of the year.

Some other experts indicated that the poor results may be the consequence of Lula da Silva's decision of implementing some economy cold-down measures in order to fight fears of a rapid inflation hike.

The report reinforces bets the central bank will keep interest rates unchanged amid signs that economic growth is no longer stoking inflation.

Economists expect the central bank to hold its benchmark interest rate at 10.75% at its board meeting this week, according to an Aug. 27 central bank survey of about 100 economists published yesterday. Central bank President Henrique Meirelles said growth will pick up again in the third quarter.