Loading ...News - Brazil Output Expands for Fifth Straight Month in May
July 2 (Bloomberg) -- Brazil’s industrial output posted its fifth straight monthly gain, even as production trails levels reached a year ago, cementing bets that Latin America’s largest economy is recovering from its first recession since 2003.
Production rose 1.3 percent from April, the national statistics agency said today in Rio de Janeiro, beating expectations for a 0.8 percent increase in a Bloomberg survey of 23 economists. Output fell 11.3 percent from the year-ago month, less than the median forecast for a 12 percent contraction.
Policy makers have cut the benchmark interest rate at all four meetings this year after gross domestic product plunged a record 3.6 percent in the October-through-December period and 0.8 percent in the first quarter. Latin America’s largest economy showed signs of stabilizing in the second quarter, as consumer confidence rose each month since February’s record low.
“Even with this slow rate of growth, we’ll have a positive GDP number in the second quarter,” said Zeina Latif, chief economist at ING Bank NV. Still, “we’re not seeing any big jumps in production.”
Brazil’s real fell 1.1 percent to 1.9534 per U.S. dollar at 12:17 p.m. New York time from 1.9325 yesterday.
Tax Cuts
Policy makers have lowered the benchmark interest rate to a record 9.25 percent from 13.75 percent in December. Analysts expect the rate to fall another 50 basis points, to 8.75 percent, at the next policy meeting this month, according to a central bank survey published June 29.
President Luiz Inacio Lula da Silva’s government has been trying to offset scarce credit and demand for Brazil’s commodity exports by expanding public spending.
This week, the government cut sales taxes on 70 capital goods in a bid to boost investment, which declined 14 percent in the first quarter compared to a year ago.
The government also lowered to a record 6 percent the long- term interest rate charged by the BNDES state development bank for lending that, with private credit tight, it plans to expand 30 percent to 120 billion reais this year.
Labor Minister Carlos Lupi said today that job creation in June would surpass the 131,000 mark in May, itself the fastest pace since September of last year. For the year, Brazil will create 1 million jobs, down from 1.45 million in 2008, he said.
“We’ve managed to stabilize the currency and consumers’ purchasing power has been recovered,” Lupi told reporters in Brasilia. “That’s what distinguishes Brazil’s economy from the rest.”
In May, 20 of 27 industries saw production expand from the previous month. Production of capital goods grew for the second straight month, by 0.7 percent, a sign that growth could accelerate in coming months, Latif said.
“Growth may accelerate a little in the coming months, as inventories decline,” she said.
Source: Bloomberg
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