By Silvio Cascione
BRASILIA (Reuters) – Industrial output in Brazil probably fell in March for a second straight month on falling auto and steel production, increasing expectations that Latin America’s largest economy will tumble into a recession.
Output from Brazilian factories and mines probably shrank by a seasonally adjusted 0.7 percent in March <BRIO=ECI> from the previous month, when it fell 0.9 percent, according to the median forecast of 26 economists in a Reuters poll.
That would be the fourth setback in five months for Brazilian manufacturers, the weakest link of an economy that has been showing broad recessionary signals since late last year.
Brazil’s economy, hurt by a combination of high inflation, rising interest rates and tighter government spending, is expected to shrink 1.18 percent this year, according to market forecasts compiled by the central bank.
Several leading indicators back up expectations of a drop in industrial output in March. UBS economists noted that steel production fell 3.8 percent last month, while energy consumption dropped 0.7 percent and auto production fell by 2.6 percent. Corrugated paper production was flat in the month.
A private survey on Monday appeared to show no hopes of a quick recovery for Brazilian manufacturers. Activity in the sector contracted at its sharpest pace in 43 months in April, according to the HSBC Purchasing Managers’ Index (PMI).
Government statistics agency IBGE will release the March industrial output report at 9 a.m. (1200 GMT) on Wednesday.
Compared with the same period a year earlier, industrial output <BRIOY=ECI> probably fell 3.1 percent in March, the median of 22 forecasts showed.
Forecasts for the monthly figure ranged from an increase of 1.1 percent to a drop of 1.5 percent, while estimates for the year-over-year figure ranged from an increase of 0.1 percent to a decline of 5.9 percent.
(Reporting by Silvio Cascione; Editing by Paul Simao)