Brazil’s industrial output slowed less than economists expected in March, raising concern that Latin America’s biggest economy is still expanding at a pace that stokes inflation.
Output rose 0.5 percent in March from the previous month, the national statistics agency said today in Rio de Janeiro. That’s more than the 0.2 percent median forecast in a Bloomberg survey of 31 analysts. Production fell 2.1 percent from a year ago, the first year-on-year decline since 2009.
“It’s not a good number for the central bank,” said Andre Perfeito, chief economist at Sao Paulo-based Gradual Investimentos. “The central bank is betting that activity will slow down, and you don’t see that in these numbers.”
Latin America’s biggest economy is slowing at an uncertain pace after expanding 7.5 percent in 2010, the fastest in two decades, the central bank said in the minutes to its April 19-20 policy meeting. With industry close to full capacity, and unemployment near a record low, inflation in April likely exceeded the 6.5 percent upper limit of the bank’s target range, a Bloomberg News survey shows.
“I can guarantee that we won’t return to the levels of inflation we have seen in the past,” Finance Minister Guido Mantega told lawmakers in Brasilia today. “Brazil will certainly be victorious.”
‘Above Expectations’
Mantega repeated his forecast that Brazil will grow 4.5 percent this year. “We have succeeded in combining higher rates of growth with lower inflation,” he said.
The yield on the interest rate futures contract maturing in January 2012, the most traded in Sao Paulo today, was unchanged at 12.33 percent at 11:15 a.m. New York time.
Yields on contracts maturing the next two years rose, pushing the January 2014 contract up 4 basis points, or 0.04 percentage point, to 12.65 percent. The real fell 0.1 percent to 1.5874 per U.S. dollar.
“Output was good, above expectations, and that just adds to consumer demand growth that doesn’t look like its letting up,” said Alexandre Sant’anna, chief economist at Rio de Janeiro-based BNY Mellon Arx, which manages 12 billion reais ($7.2 billion).
A 10.1 percent expansion in the production of electronics and communications equipment led 13 of 27 industries that saw output expand during the month. Production of capital goods, a barometer of investment, rose 3.4 percent.
March’s output results compare with a 6.9 percent year-on- year rise in February, and a 1.9 percent monthly gain.
Reduced Forecasts
Analysts covering the Brazilian economy cut their forecasts for industrial output growth for a second straight week in an April 29 central bank survey of about 100 economists. Industry will expand 4.04 percent this year and 4.25 percent in 2012, down from the previous week’s forecasts of 4.06 percent and 4.65 percent, the survey showed,
The central bank raised its benchmark interest rate by a quarter-point to 12 percent on April 20, after half-point increases in January and March. Consumer price inflation accelerated to 6.44 percent in the year through mid-April, its fastest pace since November 2008. The central bank targets inflation of 4.5 percent plus or minus two percentage points.
Brazil’s economic activity index, a proxy for gross domestic product, rose 6.8 percent in February, its fastest pace since August. Brazil’s economy grew “a little more” than 4 percent in the first quarter, Finance Minister Guido Mantega said April 18 in New York.
Manufacturers used 83.6 percent of installed capacity in February, the highest level in three years, according to the National Industrial Confederation.
Retailer Earnings
First-quarter earnings for retailers reported last week shows no slowdown in demand. Cia. Hering, a clothing manufacturer and retailer, said quarterly profit rose 74 percent from a year earlier, according to a regulatory filing. Lojas Renner SA, Brazil’s biggest publicly traded apparel retailer, said profits surged 29 percent in the first quarter.
Brazil’s retail sales fell 0.4 percent in February, the first contraction in 10 months.
Traders are wagering that the central bank will raise borrowing costs by 25 basis points, or 0.25 percentage point, to 12.25 percent on June 8, interest-rate futures contracts show.
Analysts expect the real to end 2011 at 1.62 per U.S. dollar, according to the weekly central bank survey, from 1.6613 at the end of 2010.
Source: www.bloomberg.com
Output rose 0.5 percent in March from the previous month, the national statistics agency said today in Rio de Janeiro. That’s more than the 0.2 percent median forecast in a Bloomberg survey of 31 analysts. Production fell 2.1 percent from a year ago, the first year-on-year decline since 2009.
“It’s not a good number for the central bank,” said Andre Perfeito, chief economist at Sao Paulo-based Gradual Investimentos. “The central bank is betting that activity will slow down, and you don’t see that in these numbers.”
Latin America’s biggest economy is slowing at an uncertain pace after expanding 7.5 percent in 2010, the fastest in two decades, the central bank said in the minutes to its April 19-20 policy meeting. With industry close to full capacity, and unemployment near a record low, inflation in April likely exceeded the 6.5 percent upper limit of the bank’s target range, a Bloomberg News survey shows.
“I can guarantee that we won’t return to the levels of inflation we have seen in the past,” Finance Minister Guido Mantega told lawmakers in Brasilia today. “Brazil will certainly be victorious.”
‘Above Expectations’
Mantega repeated his forecast that Brazil will grow 4.5 percent this year. “We have succeeded in combining higher rates of growth with lower inflation,” he said.
The yield on the interest rate futures contract maturing in January 2012, the most traded in Sao Paulo today, was unchanged at 12.33 percent at 11:15 a.m. New York time.
Yields on contracts maturing the next two years rose, pushing the January 2014 contract up 4 basis points, or 0.04 percentage point, to 12.65 percent. The real fell 0.1 percent to 1.5874 per U.S. dollar.
“Output was good, above expectations, and that just adds to consumer demand growth that doesn’t look like its letting up,” said Alexandre Sant’anna, chief economist at Rio de Janeiro-based BNY Mellon Arx, which manages 12 billion reais ($7.2 billion).
A 10.1 percent expansion in the production of electronics and communications equipment led 13 of 27 industries that saw output expand during the month. Production of capital goods, a barometer of investment, rose 3.4 percent.
March’s output results compare with a 6.9 percent year-on- year rise in February, and a 1.9 percent monthly gain.
Reduced Forecasts
Analysts covering the Brazilian economy cut their forecasts for industrial output growth for a second straight week in an April 29 central bank survey of about 100 economists. Industry will expand 4.04 percent this year and 4.25 percent in 2012, down from the previous week’s forecasts of 4.06 percent and 4.65 percent, the survey showed,
The central bank raised its benchmark interest rate by a quarter-point to 12 percent on April 20, after half-point increases in January and March. Consumer price inflation accelerated to 6.44 percent in the year through mid-April, its fastest pace since November 2008. The central bank targets inflation of 4.5 percent plus or minus two percentage points.
Brazil’s economic activity index, a proxy for gross domestic product, rose 6.8 percent in February, its fastest pace since August. Brazil’s economy grew “a little more” than 4 percent in the first quarter, Finance Minister Guido Mantega said April 18 in New York.
Manufacturers used 83.6 percent of installed capacity in February, the highest level in three years, according to the National Industrial Confederation.
Retailer Earnings
First-quarter earnings for retailers reported last week shows no slowdown in demand. Cia. Hering, a clothing manufacturer and retailer, said quarterly profit rose 74 percent from a year earlier, according to a regulatory filing. Lojas Renner SA, Brazil’s biggest publicly traded apparel retailer, said profits surged 29 percent in the first quarter.
Brazil’s retail sales fell 0.4 percent in February, the first contraction in 10 months.
Traders are wagering that the central bank will raise borrowing costs by 25 basis points, or 0.25 percentage point, to 12.25 percent on June 8, interest-rate futures contracts show.
Analysts expect the real to end 2011 at 1.62 per U.S. dollar, according to the weekly central bank survey, from 1.6613 at the end of 2010.
Source: www.bloomberg.com
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