Retail sales in Brazil fell unexpectedly in May as rising unemployment continued to hurt consumption, government data showed on Tuesday, suggesting the economy may take longer to hit bottom in its worst recession in decades.
Excluding cars and building materials, sales volumes fell a seasonally adjusted 1.0 percent in May from April, government statistics agency IBGE said. Economists polled by Reuters had expected a 0.4 percent increase.
Sales fell 9.0 percent from a year earlier, compared with expectations for a 6.15 percent drop.
Six of the eight sectors covered by IBGE posted declines, with furniture and home appliance sales showing one of the steepest drops at 1.3 percent. However, supermarket sales, which account for about half of all consumption, remained unchanged from April.
A broader retail measure that includes automobiles and building materials fell 0.4 percent from April and plunged 10.2 percent from May 2015, IBGE said.
A recent improvement in consumer confidence had fuelled hopes that Brazil's economy could be nearing a turning point in its severe recession. Although more than 11 million Brazilians are unemployed, many consumers have felt more optimistic about the future since the impeachment of President Dilma Rousseff in May boosted Brazilian markets and strengthened the currency.
GPA SA, Brazil's biggest retailer, on Tuesday reported a 5 percent increase in net revenue for the second quarter from a year earlier.
Brazil's economy is expected to shrink more than 3 percent in 2016 for a second straight year. With interest rates at their highest in almost a decade and inflation still well above the government's target, growth is not expected to resume until the fourth quarter or early 2017.
Sales will probably remain weak in coming months as credit continues to shrink, the labour marker worsens and confidence improves only slowly, said Josa Francisco de Lima Gonsalves, chief economist at Banco Fator in Sao Paulo.