Brazil: Retail sales – Moving up in a non-linear pace

Brazil: Retail sales – Moving up in a non-linear pace

Gustavo Arruda - Market Economics
Latam Macro Snapshot | 13 Dec 2012 13:52 |

October retail sales grew 0.9%m/m, slightly above consensus of +0.8m/m and better than the September reading of 0.3%. Within sectors, three of ten sectors contracted (apparel contracted for the third month in a row). Durable goods (the most credit-related component) gained 1.4%m/m or 13.0%y/y, while non-durable goods expanded 0.1%m/m or 6.7%y/y. Broad retail sales (including construction and vehicles sales) jumped 8%m/m in October from -8.7%m/m a month earlier, due to tax breaks on vehicles sales. Looking forward, we expect retail sales to decelerate in November due to an unusually extended holiday, but they should bounce back in December. Despite volatility in these releases, we believe the trend in retail sales will probably strengthen, on the back of monetary, fiscal and credit measures - all focused on spurring growth.

We foresee +0.6%m/m s.a. for the monthly GDP proxy in November, to come out soon – probably tomorrow. If our forecast is confirmed, the statistical carry over for Q4 2012 would be +0.6%q/q - that’s how much the economy would growth on average in Q4 against the previous quarter if the economy remained flat at the latest level until end of the year. We expect a weak November but better December.

Details

October retail sales were +0.9%m/m s.a. In annual terms, retail sales accelerated to 9.1%y/y from 8.5%y/y a month before.

Broader retail sales (including automobiles and construction sales) jumped up 8.0%m/m s.a. after -8.7% a month earlier. The current volatility on broad retail sales is explained by vehicles sales, thanks to recent tax breaks.

The upcoming monthly real GDP proxy computed by the central bank (IBC-Br) will likely to be positive in October: we expect +0.6%m/m. The figure will be out in the next few days (probably tomorrow).

Please see details and disclaimer attached.

Gustavo Arruda

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