Brazil's industrial output up on annual basis for first time in nearly three years

Industrial output in Brazil rose on an annual basis in January for the first month in nearly three years, in a sign that a severe recession could be ending soon. Production increased 1.4 percent from a year earlier, government statistics agency IBGE said on Wednesday. That topped expectations for a 1.1 percent gain in a Reuters poll of economists.
Industrial output had been falling on an annual basis for 34 consecutive months as Brazil's economy went through its worst recession on record. Data on Tuesday showed the nation's gross domestic product shrank 3.6 percent in 2016, failing to improve in the fourth quarter as economists had forecast. The stronger-than-expected industrial performance in January strengthens the argument of many economists who see Brazil emerging from recession this quarter. Finance Minister Henrique Meirelles on Tuesday said the nation was "clearly" growing again.
"The data that we already have for February suggest another increase in industrial output," economists with Sao Paulo-based Banco Bradesco SA wrote in a research note. Economists expect industrial output to grow 1.1 percent in 2017 from 2016, according to a weekly central bank survey. Industrial output fell 0.1 percent in January from December, following an increase of 2.9 percent in the last two months of 2016, IBGE said. Economists in a Reuters poll expected a decline of 0.35 percent.
The month-on-month drop resulted mostly from a 10.7 percent decline in automobile production, IBGE said. However, the national automakers' association said on Tuesday that production recovered strongly in February, growing by nearly 15 percent. A private survey of purchasing managers last week showed the manufacturing decline hit its slowest pace in 13 months in February, with confidence rising for the second straight month.
"It doesn't mean that the recovery will be solid from now on, but it looks like the industry is bottoming out," IBGE economist Andra Macedo told journalists. "The good news is that the downturn is not deepening anymore." Output increased in 12 of the 24 sectors that IBGE covers on a monthly basis.