Brazil's industrial output falls for second straight month in May

SAO PAULO, July 2 (Reuters) - Industrial production in Brazil fell for the second consecutive month in May, data from the statistics agency IBGE showed on Wednesday, as Latin America's largest economy provides signs of a slowdown amid stiflingly high interest rates.

Output was down 0.5% in May from April, IBGE said, meeting the median estimate in a Reuters poll of economists and after a revised 0.2% drop in the previous month.

The sector tends to be pressured by elevated borrowing costs. Brazil's central bank last month raised interest rates by 25 basis points to 15%, the highest since July 2006, in a bid to rein in sticky inflation.

Officials at the monetary authority have been saying that although Brazil's economy has shown resiliency even amid the rate-hiking cycle, there are now signs of a slowdown in growth.

According to IBGE, production decreased in three of the four main categories surveyed in May, with output of intermediate goods being the only one to have posted a small gain of 0.1%.

"The sequence of two declines in industrial production appears consistent with the broad contours of our forecast for a deceleration of GDP growth," JPMorgan economists Vinicius Moreira and Cassiana Fernandez said in a note to clients.

On a yearly basis, production in May grew 3.3%. Economists polled by Reuters expected a 3.5% expansion.