Industrial output in Brazil slumped for the fifth straight month in March on a year-on-year basis, underscoring the extent of a severe economic downturn that has forced many manufacturers to scale back production. Output tumbled 10 percent in March from the year-earlier period, bringing the cumulative slump in production in the first three months of the year to a hefty 14.7 percent, the government's statistics agency IBGE said on Tuesday.
The monthly result, which showed a smaller drop in output than in February, matched the median forecast of 21 economists surveyed by Reuters. Estimates for the contraction ranged from 11.9 percent to 8.6 percent. Twenty of the 27 industrial sectors tracked by the IBGE showed a drop in output in March, led by a 27.2 percent plunge in production of machinery and factory equipment. Automobile output tumbled 18.5 percent in March from a year earlier as manufacturers like Fiat and General Motors kept production to a minimum while they sought to burn through existing inventories.
Output of steel and metals, another sector that has suffered in the current economic slump, fell 29.2 percent in March from the same period in 2008. On a month-on-month basis, however, industrial output crept higher in March for the third month in a row, suggesting that some sectors are starting to bet on an economic recovery as consumer demand begins to bounce back.
Industrial production rose 0.7 percent in March from February, also matching the median forecast in the Reuters poll. Estimates for the month-on-month increase ranged from 0.3 percent to 1.8 percent. Brazil's central bank has been slashing interest rates since the start of the year in a bid to boost consumer demand and help spark an economic rebound.
Last week, the bank reduced its benchmark lending rate by 100 basis points to an all-time low of 10.25 percent. Interest-rate futures at the BM&F commodities and futures exchange in Sao Paulo fell early on Tuesday after the industrial data was released, suggesting that investors expect the central bank to cut rates further in the coming months.