January's improvement comes just one month after Brazilian industry posted its steepest monthly decline since December 2008. December's industrial production drop from November was revised on Tuesday to an even further 3.7% from 3.5% previously.

Manufacturing has consistently been the weakest link in Brazil's commodities-strong economy as companies struggle with competition from abroad, high tax and labor costs, and poor infrastructure.

While capital goods production rose 10% in January from December, its base of comparison was low following a 12.2% drop in December, revised down from a 11.6% decline by IBGE on Tuesday.

IBGE also revised December's decline from a year earlier to 2.5% from 2.3% previously.

Of the 27 industrial sectors surveyed by IBGE, 17 expanded in January from December, including pharmaceuticals, office equipment and machinery.

Automobile production rose for the first month in four, climbing 8.7% from December as workers returned from collective vacations. In broader industrial categories, consumer goods rose 2.3% from December while intermediate goods advanced 1.2%.

January's industrial production shrank 2.4% from a year earlier.

Economists expect industrial output in Brazil to grow 1.57% this year, according to the median forecast in a central bank poll released Monday. A week earlier, the poll predicted 1.8% growth for the year. The performance of the manufacturing sector is not good news for the administration of Dilma Rousseff who is bidding for re-election next October, even when opinion polls have her comfortably ahead.

MercoPress