MercoPress. South Atlantic News Agency

Cars and construction spur Argentina industrial production 12.5% in November

Construction is booming in Buenos Aires

Argentina's industrial production grew more than expected in November, on the back of big gains in automobile and construction materials output. Industrial production last month rose 12.5% on the year, and 4.1% in seasonally adjusted terms from October, the national statistics agency, Indec, reported Friday.

Friday's report came as little surprise to economists and investors after President Cristina Fernandez said Wednesday that manufacturing grew 12.8% on the year in November.

“We expect the industrial sector to continue to record solid growth in the coming months, driven chiefly by solid foreign demand as demand among some of the main trading partners remains strong, namely Brazil,” Goldman Sachs economist Alberto Ramos said in a note.

Capacity utilization was 83.4% last month, its highest level in a year, led by basic metals at 90.2%; textiles 90.1%; paper and cardboard 88.8%; petrochemicals 87.1%; and automobiles 84.2%.

Argentine industry expanded 9.7% during the first 11 months of the year, compared to the same period in 2009, according to Indec.

Expansion was noted in food processing, textiles, printing, automobile and machinery, petrochemical, construction materials and metals output, while declines were observed in tobacco, paper and cardboard, and oil refining.

The growth in food processing was extremely sluggish at just 3.3% on the year in November. Though milling of cereals and oil bearing grains rose 21.4% last month, beef production plunged 30.1%, while the output of other meats such as chicken and pork was almost flat.

Reflecting this sluggish tendency, food and beverage prices posted the biggest gains in Indec's consumer price index for November. Annual inflation as measured by the CPI was 11% at the end of last month, about half of what most private-sector economists had forecast.

Indec said Friday that 70.1% of the industrial firms it surveyed expect domestic demand to remain steady in 2011, while 21.8% expect demand to improve. In terms of exports, 63.7% of firms expect shipments of goods and services abroad to remain stable next year, and 23.5% see their export business improving.

Indec also reported on Friday that the Argentine economy grew 8.6% in the third quarter from a year earlier, down from the 11.8% growth rate in the second quarter. The economy expanded 0.4% from the second quarter.

A record soybean harvest of 55 million metric tons and booming auto output and exports are helping Argentina rebound from last year’s 0.9% expansion, the lowest since 2002. According to the central bank, the economy will grow 9% this year, the most since 2005.

However market analysts anticipate the Argentine economy will slowdown in 2011 as manufacturers reach full capacity and imports rise to meet increased consumption.