May 11, 2017 / 1:43 PM / in a year

UPDATE 1-Brazil retail sales fall in March at fastest rate in 14 years

 (Recasts with details, data revisions, comments)
    RIO DE JANEIRO, May 11 (Reuters) - Retail sales in Brazil
unexpectedly fell in March at the steepest monthly rate in 14
years, strengthening bets on a bolder interest rate cut at the
end of this month.
    Sales volumes excluding cars and building materials fell 1.9
percent in March from February, government statistics agency
IBGE said on Thursday, below forecasts in a Reuters poll of
economists for a decrease of 0.6 percent.
    Sales fell 4.0 percent from the year-earlier period, worse
than expectations for a drop of 1.8 percent.
    Consumption has slumped as a record 14 million Brazilians
were unemployed after the country's worst recession ever. The
surprisingly weak performance of Brazilian commerce in March
frustrated hopes of an imminent recovery after an extraordinary
upward revision for the January results.             
    Yields on interest rate futures slipped in morning activity
as traders added bets that weak economic activity and
below-target inflation will prompt the central bank to cut its
benchmark lending rate by 125 basis points on May 31, after a
100-basis-point cut last month. 
    IBGE revised previous data again this month due to a recent
change in the base year for the series. Sales fell 1.6 percent
in February, down from a previously reported decrease of 0.2
percent, and rose 6.0 percent in January, up from a rise of 5.5
percent previously.
    Economists said the frequent revisions complicate forecasts
just as Brazil's economy seems to be nearing a turning point.
    "The new retail sales survey has been exceedingly noisy and
volatile in recent months, making it difficult to extract the
proper signal in terms of the underlying strength of private
consumption and overall activity," Goldman Sachs economist
Alberto Ramos wrote in a note.
    The government continued to see the economy resuming growth
in the first quarter despite the weak retail performance in
March, but job creation should only recover after mid-year,
Finance Minister Henrique Meirelles said.     
    A broader retail sales measure that includes cars and
building materials fell 2.0 percent in March from February after
a 0.6 percent increase in the previous month.

 (Reporting by Rodrigo Viga Gaier; Writing by Silvio Cascione;
Editing by Jeffrey Benkoe)
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