Brazil's industrial production resumes downward trend in September

SAO PAULO, Nov 4 (Reuters) - Brazil's industrial production fell in September, data from statistics agency IBGE showed on Tuesday, matching market expectations and losing momentum amid high borrowing costs.

Following a rebound in August, industrial output in Latin America's largest economy dropped 0.4% in September from the previous month, IBGE said, resuming a downward trend since April.

In September, "significant declines in production" in key segments such as pharmaceuticals, extractive industries and the auto sector dragged output down, IBGE research manager Andre Macedo said in a statement.

Three of the four major economic categories surveyed reported a drop in production.

Pantheon Macroeconomics' chief Latin America economist Andres Abadia expects industrial output to remain pressured in the short term, but sees room for improvement next year as easing inflation and potential rate cuts support domestic demand.

"Momentum in extractives is softening, while manufacturing continues to struggle under tight financial conditions, a cooling labour market and slowing domestic demand," he said.

Policymakers at Brazil's central bank are set to announce their next monetary decision on Wednesday, having signaled they would keep interest rates steady for a prolonged period at 15%, a near 20-year high, in an effort to curb inflation.

On a yearly basis, industrial production in September rose 2%. Economists in the Reuters poll had expected a 1.7% rise.