Production had been expected to rise 0.7 percent, according to the median estimate of 12 analysts in a Reuters survey. The forecasts ranged from a 0.1 percent drop to a 1.7 percent increase.

July's industrial production fell 0.3 percent compared with a year earlier, falling short of the 0.1 percent increase expected in the Reuters survey. Estimates for the output ranged from a 1.4 percent drop to a 1.2 percent rise.

Signs of a slowdown in Latin America's biggest economy, combined with a dimmer outlook for global growth point, to the end of the central bank's recent tightening cycle, which has lifted the benchmark Selic interest rate to a 30-month high.

Copyright Reuters, 2011