Brazil’s industrial production fell 1.3% in March from the month before, statistics agency IBGE said on Friday, a steeper fall than economists had expected and another indication of the economy’s sub-par performance in the first quarter.
It was the biggest decline in six months, almost double the median estimate of a 0.7% fall in a poll of economists, and weighed heavily on the longer-term measures of industrial output.
Production slumped 6.1% compared with the same month last year, the biggest annual decline since May last year, IBGE said, although the statistics agency noted that there were 19 working days in March this year compared with 21 last year.
Output in the first quarter was down 2.2% compared with the January-March period last year, and over the past 12 months production is now down 0.1% on the previous 12 months. That’s the first cumulative decline since August 2017, IBGE said.
“Today’s weak print increases the risk of a negative quarterly sequential real GDP growth figure for the first quarter of 2019,” wrote Alberto Ramos, head of the Latin American Economic Research at Goldman Sachs, in a note.
Brazil’s “long underperforming” industrial sector should slowly start to recover, Ramos said, but will continue to face headwinds from weak activity in Argentina, a major market for Brazilian manufacturing exports.
The weak performance was spread across most industries and sectors. Production of intermediary goods fell 1.5% on the month, consumer durables fell 1.3% and semi- and non-durable consumer goods fell 1.1%, IBGE said.
In terms of sectors, the 4.9% slide in food production was the biggest single contributory factor to the overall decline, IBGE said. Auto production fell 3.2%, and petroleum and biofuels products output fell 2.7%.
In March, Brazil’s central bank reduced its forecast for industrial production growth this year to 1.8% from 2.9%, a key factor behind the redaction of its overall 2019 GDP growth forecast to 2.0% from 2.4%.