Loading ...News - Brazil’s Retail Sales Rose More Than Expected in May
July 14 (Bloomberg) - Brazil’s retail sales rose more than analysts expected in May, reinforcing bets that consumer demand is driving the rebound in Latin America’s biggest economy.
Sales rose 4 percent in May from the same month a year earlier, compared with a revised 7.1 percent gain in April, the national statistics agency said. Economists anticipated an increase of 3.2 percent in May, according to the median estimate of 19 analysts surveyed by Bloomberg. Sales rose 0.8 percent from April, higher than the forecast for a 0.4 percent increase.
Today’s report adds to evidence that Brazil may contract less than previously expected in 2009, boosting expectations policy makers will pause after cutting the benchmark interest rate for a fifth straight time next week. Economists expect the bank to cut the overnight rate to a record 8.75 percent on July 22, according to a July 10 central bank survey.
“Domestic demand is fueling the recovery, but at a slow pace,” Diego Donadio, senior analyst at BNP Paribas in Sao Paulo, said in a telephone interview. “There is still room for the central bank to cut rates.”
The yield on the overnight interest-rate futures contract due January 2010, the most traded on the BM&F Bovespa exchange, fell two basis points to 8.72 percent at 11:50 a.m. New York time. The real gained 0.4 percent to 1.9698 per dollar from 1.9782 yesterday.
Smaller Contraction Expected
The central bank’s July 10 survey shows analysts expect Brazil’s gross domestic product to shrink 0.34 percent in 2009, compared with a forecast for 0.50 percent drop a week earlier.
Itau Unibanco Holding SA, Brazil’s largest bank, cited Brazil’s “good potential for domestic consumption growth” in raising its forecast last week for GDP growth of 4 percent in 2010. Previously the bank forecast a 3.7 percent increase.
Unemployment fell for the second straight month in May, to 8.8 percent, while companies added jobs for the fourth month, cementing expectations that the economic recovery gained pace in the second quarter.
Cia. Brasileira de Distribuicao Grupo Pao de Acucar and Grupo Silvio Santos are among local retailers betting that consumer spending will rebound sharply as Brazil’s first recession since 2003 shows signs of bottoming out.
Pao de Acucar, Brazil’s largest retailer, said yesterday that sales at stores open for more than a year rose 16 percent in the second quarter, led by credit-sensitive products like home appliances. The company also said it plans to double the size of its Assai wholesale chain and last month acquired 455 stores owned by the Ponto Frio electronics chain.
Silvio Santos said June 16 that its Bau Crediario electronics and home-appliance chain was buying bigger rival Rede Dudony for 8 million reais ($4.1 million).
May’s retail sales results “were a positive surprise for market participants and should reinforce the perception that the economy is bound to accelerate the pace in the coming months,” Jankiel Santos, chief economist for Banco Espirito Santo de Investimentos, wrote in a report.
Source: Bloomberg.
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