BRASILIA: Industrial production in Brazil rose in December for an eighth month, figures showed on Tuesday, but not enough to prevent the biggest yearly decline in four years, which means the sector is still significantly smaller than its peak almost a decade ago.

While December's 0.9% jump in output was far higher than economists had expected, the accumulated fall in output last year was 4.5%, more than four times the 1.1% contraction the year before.

It was the biggest yearly fall since the 6.4% fall in 2016, statistics agency IBGE said.

Purchasing managers index data and industrial confidence surveys for January show the sector has started 2021 on an unsteady footing, with a second wave of the COVID-19 pandemic and end of emergency government cash transfers weighing heavily.

"Overall, this data release suggests that Brazil's economy ended 2020 on a positive note," said Nikhil Sanghani, Latin America economist at Capital Economics, predicting that industrial production added 0.5 percentage points to gross domestic product growth in the fourth quarter.

"But we think that the outlook for 2021 is bleak. We expect GDP growth of just 3% this year, which is below the consensus."

IBGE figures showed that industrial output rose 0.9% in December from the prior month, more than four times the median estimate in a Reuters poll of economists for a rise of 0.2%.

The main drivers of December's output growth were metals, autos and mining, IBGE said. The year-on-year increase in December was 8.2%, also more than the 6.3% rise forecast in a Reuters poll.

In the eight months of rising output, the sector grew by more than 40%, IBGE said, more than making up for the 27% contraction in March and April at the height of the COVID-19 pandemic and lockdowns.

However, the 4.5% accumulated fall in 2020 means Brazilian industry is still 13.2% smaller than its peak in May, 2011, IBGE said.

The central bank forecasts a 5.1% rise in industrial output this year.