Economic activity in Brazil rebounded sharply in July despite a bigger-than-expected drop in retail sales and slight gains in industrial activity during the same month, central bank data showed on Friday. The central bank's IBC-Br economic activity index rose 1.50 percent in July from June in seasonally adjusted terms, above market estimates for an increase of 0.8 percent.
"It is surprising to see such a good number because we had two sectors that did not perform that well that month," said Jankiel Santos, chief economist with Espirito Santo Investment Bank. "The central bank does not release more details on that number, which makes it difficult for us to evaluate the figures." The central bank's IBC-Br index, which tries to anticipate economic growth figures, has many times been at odds with benchmark GDP results released by Brazil's statistics agency, IBGE.
Retail sales posted their biggest monthly decline in nearly six years in July while industrial output rose a mere 0.7 percent that month as the country's economy continues to drag. The index showed the economy activity rebounded as the soccer World Cup wound down and factories and shops went back to normal. In June, activity plunged after businesses shut down due to holidays in cities that held tournament matches.
The government partly blamed the string of holidays for sinking the economy into recession in the first half of the year. The index, a gauge of activity in the farming, industry and services sectors, dropped a non-seasonally adjusted 0.23 percent over the same month a year ago.
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