The manufacturer's union UIA said that Argentina's industrial production in May 2011 expanded by a wide margin as car makers, steel manufacturers and metalworkers continued to crank up output. Industrial production in May 2011 jumped 9.6% YoY, bringing the accumulated gain during the first five months of the year to 9.2%.

The UIA figures are largely in line with the government's data. The national statistics agency Indec reported a May industrial production rise of 9% on the year, with the gain during the first five months of the year also at 9%.

The UIA said that while manufacturing was up sharply, some industries underperformed. It added that "The sectors with the most traction, were automobiles, followed by metal works and base metals, which accounted for close to 75% of all growth."

According to the UIA, production of foodstuffs expanded at a more moderate pace of 4.4%, largely due to the bumper output a year earlier and a high base of comparison.

According to the government, manufacturing has surged over the past year alongside the overall economy. Argentina's gross domestic product is likely to expand by 7.5% to 8% this year, following 9.2% growth in 2010.

Domestic sales of cars, electronics and home appliances are booming, thanks to double digit inflation and hefty salary hikes negotiated by unions. Inflation is also fueling a consumer spending spree as Argentines pour their money into durable goods as a hedge against the peso's loss of purchasing power.

Automobile production in May was up 33% on the year, with 79,585 vehicles rolling off assembly lines, according to the auto makers' association, Adefa. Auto exports, 81% of which go to Brazil, rose 36% on the year to 52,715.

According to the steel chamber Acero, raw steel production in May 2011 totaled 495,800 tonnes, up by 13.1% YoY and 4.6% MoM. Steel production during the first five months of the year reached over 2.24 million tonnes, up by 10.6% YoY and steelmakers are operating at 80% capacity.

(Sourced from www.dowjones.com)