(Reuters) - Brazilian industrial output dropped in June for a fourth straight month as automobile production plunged, in a further sign of the downturn in the country's economy, Latin America's largest.
Output at factories and mines in June fell a seasonally adjusted 1.4 percent from May, slightly less than expected, statistics agency IBGE said on Friday.
The last time industrial output shrank for four straight months was in mid-2010. May's drop was also revised to 0.8 percent, from a previously reported 0.6 percent.
The soccer World Cup, which ran from June 12 to July 13, was a setback for the factories as some cities ordered holidays ahead of major matches, reducing the number of working days. But it was not the single reason for the drop.
"The Cup only added fuel to the industry's downturn, which has been caused by high inventories, low confidence, weak domestic demand, unfavorable scenarios overseas and tight credit," IBGE economist André Macedo told journalists.
Manufacturing has been the weakest link in Brazil's economy despite a string of tax breaks and other government subsidies. Industrial output is expected to drop more than 1 percent in 2014, which could tip Brazil into a recession and send unemployment higher, according to many economists.
Brazilian factories, particularly car makers, were also affected by the recession in Argentina. Automobile production dropped 12.1 percent in June from May, driving output of durable consumer goods down by a steep 25 percent, IBGE said in a note.
The economic downturn in Argentina is likely to worsen after it defaulted on its debt for the second time in 12 years.
The industrial downturn cost nearly 60,000 manufacturing jobs in May and June alone, according to government data . June industrial production was down 6.9 percent from a year earlier.
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Output at factories and mines in June fell a seasonally adjusted 1.4 percent from May, slightly less than expected, statistics agency IBGE said on Friday.
The last time industrial output shrank for four straight months was in mid-2010. May's drop was also revised to 0.8 percent, from a previously reported 0.6 percent.
The soccer World Cup, which ran from June 12 to July 13, was a setback for the factories as some cities ordered holidays ahead of major matches, reducing the number of working days. But it was not the single reason for the drop.
"The Cup only added fuel to the industry's downturn, which has been caused by high inventories, low confidence, weak domestic demand, unfavorable scenarios overseas and tight credit," IBGE economist André Macedo told journalists.
Manufacturing has been the weakest link in Brazil's economy despite a string of tax breaks and other government subsidies. Industrial output is expected to drop more than 1 percent in 2014, which could tip Brazil into a recession and send unemployment higher, according to many economists.
Brazilian factories, particularly car makers, were also affected by the recession in Argentina. Automobile production dropped 12.1 percent in June from May, driving output of durable consumer goods down by a steep 25 percent, IBGE said in a note.
The economic downturn in Argentina is likely to worsen after it defaulted on its debt for the second time in 12 years.
The industrial downturn cost nearly 60,000 manufacturing jobs in May and June alone, according to government data . June industrial production was down 6.9 percent from a year earlier.
yahoo.com
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