Itaú BBA - Evening Edition – Industrial production remains weak in Brazil

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Evening Edition – Industrial production remains weak in Brazil

June 4, 2019

The 3-month moving average rate with seasonal adjustment declined 0.1%.

Talk of the Day

Brazil

Industrial production increased 0.3% mom/sa in April, slightly above our forecast (0.2%) and below the median of market expectations (0.7%). The 3-month moving average rate with seasonal adjustment declined 0.1%. In year-over-year terms, the index receded 3.9% – also close to our estimate (-4.0%) and below the market’s (-3.0%). Manufacturing advanced 1.2% mom/sa in the period, while mining/extraction dropped 9.7%, possibly reflecting lower iron ore production following the dam collapse in Brumadinho. Looking at the breakdown, only production of intermediate goods declined in April (-1.4%). Production of semidurable/non-durable goods advanced 2.6%, while capital goods increased by 2.9%. Meanwhile, production of durable consumer goods reached its highest level since June 2018 (seasonally adjusted), after a 3.4% increase during the month. The two components that are more closely related to capital investments, capital goods and construction material, also expanded in April, but remain at low levels. Our preliminary forecast for May’s industrial production is a 2% mom/sa decline, which reinforces the downside risk to our GDP growth expectation of 1% in 2019.
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Argentina

Tomorrow’s Agenda: At 4:00 PM, manufacturing and construction data for April will see the light. We expect to see another year-over-year drop in manufacturing activity, which fell 13.4% yoy in March. Additionally, the carmakers association (ADEFA) will release May’s data on production, exports and domestic sales to car dealers

Chile

Tomorrow’s Agenda: The central bank will publish the monthly GDP proxy (Imacec) for April at 9:30 AM, which we expect to grow 0.4% mom/sa, leading the annual growth to 1.9% in the period.

Colombia

Tomorrow’s Agenda: At 2:00 PM, inflation for the month of May will be released. We expect a month-over-month reading of 0.34% (from 0.25% in the same month of last year), resulting in annual inflation of 3.34%.



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