MercoPress. South Atlantic News Agency

Argentina’s industrial production expands 11.8% in first seven months of 2010

Automobile and steel sectors lead the bullish rebound

Argentina's industrial production rose sharply on the year in July but slowed somewhat from the brisk pace posted in June, the manufacturing group UIA said in a report Wednesday.

June's industrial production was up 8% on the year but slipped 2.3% on the month, said the Argentina Industrial Union, UIA. That brings year-on-year growth during the first seven months of the year to 11.8%, with the automobile and steel sectors leading the rebound.

“While the trend is still favorable, since May the year-on-year growth rate has decelerated, due in part to the base of comparison and the gradual recovery seen towards mid 2009,” the UIA said.

However, some of the slowdown during the winter was also due to restrictions on natural gas supply, according to the UIA. The government cuts off gas supplies to industry during unusually cold periods when residential demand peaks and supply is insufficient to heat homes and supply manufacturers.

The UIA June manufacturing gain nearly matched the 7.9% gain reported by the government in late August.

A sharp rebound in manufacturing, bumper crops this season, strong growth by top trade partner Brazil, heavy government spending and the weak currency are helping to fuel a strong expansion in the economy.

The Central Bank of Argentina expects gross domestic product--a measure of the economy's overall output of goods and services--to expand between 8.9% and 9.5% this year on the back of private consumption and higher exports to key trading partners Brazil and China.

GDP grew 0.9% last year, according to the Argentine government data.