Brazil industrial output still sluggish in November

Industrial output in Brazil rose 0.3 percent in November from October, snapping three consecutive monthly drops, but the recovery was not strong enough to signal a solid rebound for an economy that stalled in the third quarter. November's industrial production fell 2.5 percent compared with a year earlier, the biggest annual drop since October 2009, the government statistics agency IBGE said on Thursday.
The fall was in line with a 2.5 percent drop predicted by analysts in a Reuters survey. Production had been expected to rise 0.4 percent on a monthly basis, according to the survey. Industrial output has remained stagnant for most of 2011 as a stronger currency brought an avalanche of cheap imports that forced many companies to close shop or cut output.
A sharp economic slowdown at home and abroad is seen further hurting demand for Brazilian manufactured products. In November, 18 of the 27 industrial sectors surveyed rose from the previous month. Production of capital goods jumped 1.6 percent, with consumer goods up 2.3 percent. Durable consumer slipped 0.9 percent. The debt crisis in Europe has also damaged Latin America's biggest economy.
"The small rebound is not really a surprise. We are pretty sceptical that is going to be enough to drive economic growth in the fourth quarter and beyond," said David Rees, an economist with Capital Economics in London. "The general outlook of the economy is not pretty."
To prevent a mild recession the government of President Dilma Rousseff is racing to revive growth and help the industry by cutting rates, removing credit curbs and slashing taxes on some products and investments. The central bank has trimmed 150 basis points off its benchmark Selic rate to 11 percent in a bid to lift credit that has showed signs of weakness in recent months.
More cuts are expected as global economic headwinds curb trade and lending. T he economy this year is seen recovering slightly from 2011, when the economy likely grew only 2.87 percent, according to a central bank survey of economists. That's a far cry from the government's own estimate of above 4 percent expansion in 2012. The government has promised more measures to help exporters of manufactured goods later this year. October's industrial output drop on a monthly basis was revised down to 0.7 percent in the wake of some of the worst months of the European crisis.