- Only five of 34 economists expected sales to grow in June
- ‘Light at the end of the tunnel,’ says Capital Economics
Brazil’s retail sales unexpectedly increased in June as economic measures proposed by Acting President Michel Temer’s administration fuel consumer confidence.
Sales rose 0.1 percent in June after a revised 0.9 percent drop the prior month, the national statistics agency said Tuesday. The number surprised economists whose median forecast was for a 0.4 percent drop. Only five of the 34 economists surveyed by Bloomberg expected growth in June. Sales plunged 5.3 percent versus the same month in 2015.
While business and consumer confidence levels have been improving since Temer took over in May, sales have lagged. The industrial sector of Latin America’s largest economy has been rising for months but retail has struggled to regain momentum as shoppers face rising unemployment and borrowing costs that remain at their highest in almost a decade. June’s surprise increase was the third positive data in six months.
“Inflation is starting to come down now, there is a sense that some of the heat has come out of the political crisis, and that’s given some support to consumer confidence,” Neil Shearing, chief emerging markets economist for Capital Economics, said by phone. “Consumers still seem to be under pressure, but this does at least suggest that there’s some light at the end of the tunnel.”
Sales of food, beverages and tobacco products at hypermarkets and supermarkets fell 0.4 percent in June, after a revised 0.1 percent growth a month earlier. Apparel sales grew 0.7 percent, marking their third straight month of increase.
Broad retail sales, which include cars, car parts, and construction materials, fell 0.2 percent from May, and 8.4 percent versus June last year, according to the statistics institute.