Brazil's industrial output unexpectedly grew 0.4% m/m sa in January after declining 0.5% in December, improving the trend slightly. But it still shrank 3.7% 3m/3m sa from 4%. Industrial output, in annual basis, shrank 13.8% after declining 8.3% in 2015. Production of capital goods grew 1.3% m/m sa, whereas intermediate goods production expanded 0.8% m/m sa. On the contrary, consumer goods production fell 0.9% m/m sa, which is mainly due to 2.4% m/m sa decline in durable goods.
Brazil's industrial data for January leaves a negative carry-over of 6.1% for 2016, that is, if industrial output continues to be flat throughout 2016, it will shrink by this magnitude as compared with 2015's decline of 8.3%.
"We continue to stand by our view that this year's recession should be slightly more contained than the 3.8% contraction of real GDP in 2015", says Barclays.
The growth in intermediate and capital goods can be an early sign of wide import substitution process as the unit labor cost has declined to the levels of eight years ago. This can be a solid factor helping any rebound in the industrial sector in the medium term, as opposed to the high level of inventories.


Asian Stocks Rise as Bond Yields Ease Ahead of U.S. Inflation Data
Asian Stocks Fall as Bond Yields and Oil Prices Surge
Dollar Eases Near Two-Month High as Yen Rebounds
BOJ Signals Faster Rate Hikes as Inflation Risks Grow
Gold Holds Near Seven-Week Low as Fed Rate Hike Bets Rise
Asian Currencies Mixed as Yen Weakens, RBA Hike Looms
Australia Trade Surplus Shrinks Sharply as Imports Surge
Best Gold Stocks to Buy Now: AABB, GOLD, GDX
Australia Inflation Accelerates to 4% After RBA Rate Hike
US Dollar Hits Two-Month High as Aussie, Pound Slide
Asian Currencies Mixed as Yen Slides on BOJ Rate Signals
Japan Factory Output Unexpectedly Falls 1.7% in August




