September 13, 2019 / 12:49 PM / 3 months ago

UPDATE 1-Brazil economic recovery stalls in July, central bank index shows

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By Jamie McGeever

BRASILIA, Sept 13 (Reuters) - Economic activity in Brazil fell slightly in July, a central bank indicator showed on Friday, running counter to other data that had suggested the economy started the third quarter on a solid footing.

The central bank’s IBC-Br economic activity index, a leading indicator of gross domestic product (GDP), fell 0.16% in July from June, the first decline in three months.

Other economic data reports for the month of July released earlier this week showed bumper retail sales and strong activity in the dominant service sector, both rising at the fastest pace this year.

Friday’s figures might serve as a reminder that the economic recovery remains uneven and lacking sustained momentum. The index has risen only two months this year, in May and June.

So far this year, activity is up 0.78% on the same period in 2018, the IBC-Br index shows, largely in line with consensus market, government and central bank estimates that the economy will grow by around 0.8% this year.

Over the last 12 months, activity is up 1.07%, the central bank said.

Both these longer-term trends reflect the tepid recovery from the 2015-16 recession, a key reason why the central bank is widely expected to cut interest rates again next week.

The economy expanded by 0.4% in the second quarter, having contracted by 0.2% in the first. Economy Ministry officials reckon the worst is now behind it, although unemployment remains high and the global outlook is increasingly challenging. (Reporting by Jamie McGeever; Editing by Raissa Kasolowsky and Andrea Ricci)

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