Quantcast
Home » News » Justice
Home » News » Justice

Brazil’s retail sales rose in May ahead of World Cup

First Published Jul 16 2014 10:49AM      Last Updated Jul 16 2014 10:49 am

Rio de Janeiro — Brazil’s retail sales in May unexpectedly rose as consumers shopped for domestic goods in preparation for the World Cup soccer tournament.

Sales rose 0.5 percent after a 0.4 percent decline the previous month, the national statistics agency said Wednesday in Rio de Janeiro. That was above forecasts from 34 economists surveyed by Bloomberg, whose median estimate was for sales to decline 0.1 percent.

May’s sales marked the first growth since January as shoppers cope with accelerating inflation and higher interest rates. Consumer confidence that in May fell to a more than five- year low has since rebounded. President Dilma Rousseff saw a bounce in support ahead of October elections as she labors to pull the country from the slowest growth of gross domestic product for any president in more than two decades.



"Clearly it reduces some of the downside pressure for GDP in the second quarter," David Beker, chief Brazil economist for Bank of America Merrill Lynch, said by phone from Sao Paulo. "Everyone was moving their second-quarter forecasts toward negative numbers, and the fact we got this positive surprise means the second quarter won’t be as bad."

Sales of items for personal and domestic use rose 2.4 percent following a revised 0.2 percent expansion the prior month. Furniture and appliance sales increased 1.8 percent after a revised 0.3 percent rise. Both results were associated with shoppers preparing to watch the monthlong soccer tournament at home, according to Beker.

Sales of food, beverages and tobacco at hypermarkets and supermarkets rose 0.1 percent, after falling a revised 0.9 percent in April. Retail sales in May rose 4.8 percent from last year, versus a median forecast for 3.7 percent expansion. The broader retail index, which includes cars and construction materials, increased 0.9 percent from a year ago, versus a median estimate of 0.3 percent.

Brazil’s government extended through year-end the IPI excise tax reduction for vehicle sales, Finance Minister Guido Mantega announced June 30 following a meeting with car manufacturers. Brazil’s automobile industry pressured for government assistance this year, as prospects of reduced tax incentives cut into sale expectations.

Brazilian retailers including Hypermarcas and Magazine Luiza are expecting a new wave of upward mobility to boost sales, their Chief Executive Officers Claudio Bergamo and Luiza Helena Trajano, respectively, said in Bloomberg’s Sao Paulo office May 22. Brazil’s unemployment rate was 4.9 percent in April, a record low for the month and the most recent data as a strike at the statistics institute impeded release of May data.

Central bank directors in May held the benchmark Selic at 11 percent after 375 basis points of increases since April 2013. They will again leave the benchmark rate unchanged at their monetary policy meeting that concludes today, according to all estimates from 57 economists surveyed by Bloomberg. The bank targets inflation of 4.5 percent, plus or minus two percentage points.

Consumer prices rose 6.52 percent in the year through June, breaching the ceiling of the government’s target range. Even as inflation accelerated from the prior month, consumer confidence as measured by the Getulio Vargas Foundation rebounded from its lowest level since April 2009.

Brazil’s economy grew 0.2 percent in the first quarter, after expanding 2.5 percent in 2013, the statistics institute said May 30. Growth during Rousseff’s first three years averaged 2.1 percent, the lowest level for a president since Fernando Collor, who stepped down in 1992. Economists surveyed weekly by the central bank forecast 1.05 percent growth in 2014.

"We’re not changing our view that we’re moving toward a much slower growth this year, looking at retail sales," Roberto Padovani, chief economist at Votorantim Ctvm Ltda., said by phone from Sao Paulo. "In spite of a better monthly result, we still don’t see a different scenario. We still see a stagflation scenario of low growth and high inflation."

Rousseff’s support ahead of October elections jumped four percentage points, to 38 percent, following three straight drops this year, according to a Datafolha poll conducted July 1-2. That poll came before Germany thrashed Brazil’s soccer team in the World Cup July 8, during which fans jeered Rousseff as they had in the tournament’s opening game. They hurled insults at her again after the final game on July 13.

 

 

 

 

comments powered by Disqus