Thursday September 07 2017
Brazil Trims Key Rate by 100 Bps to 8.25%
Mario | mario@tradingeconomics.com

The Central Bank of Brazil unanimously cut its key Selic rate by 100 basis points to 8.25 percent on September 6th of 2017, as widely anticipated. It was the eighth straight rate decline, bringing borrowing costs to the lowest since 2013 amid slowing inflation and a sticky contraction. The decision was unanimous and no bias was adopted. It follows a 100 bps cut in the July 26th of 2017 meeting.

The statement underscored that economic activity remains consistent with a gradual recovery of the Brazilian economy; that the global outlook has been favorable; and that inflation developments remain favorable, with various indicators running at low levels. The Committee judged that economic conditions prescribe accommodative policy, with economic reforms contributing to the reduction of the structural interest rate. Regarding the next meeting, the Copom views a moderate reduction of the pace of easing as appropriate.

The central bank started its easing cycle in October last year after the inflation rate eased from double digits. Inflation slowed faster than expected in the past seven months due to subdued economic activity and a stronger real. Consumer prices in Brazil increased 2.46 percent year-on-year in August of 2017, slowing from a 2.71 percent rise in July and below market expectations of 2.6 percent. The inflation rate eased for the 12th consecutive month to a new low since February of 1999. It is also the lowest rate for an August month since at least 1980 as a record harvest dragged down food prices.

The economic recovery is still taking longer than initially expected, albeit recent improvements seen lately. Auto production in Brazil jumped 15.4 percent to 260.3 thousand vehicles in August of 2017 from a revised 225.5 thousand in the previous month. It is the strongest increase in car production since May. Also, consumer confidence rose to 101.6 in August 2017 from 99.5 in the previous month. It is the strongest reading since April, as consumers are more upbeat about financial situation, less indebted and more likely to do major purchases.

The median estimate in a central bank poll of economists currently points to growth of 0.50 percent in 2017 (vs 0.34 percent back in July of 2017) and 2.00 percent in 2018 (unchanged from July). Analysts expect the Selic rate to end 2017 at 7.25 (vs 7.50 percent).




Wednesday September 06 2017
Brazil Inflation Rate Falls to Fresh 1999 Low of 2.46%
IBGE | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Brazil increased 2.46 percent year-on-year in August of 2017, slowing from a 2.71 percent rise in July and below market expectations of 2.6 percent. The inflation rate eased for the 12th consecutive month to a new low since February of 1999. It is also the lowest rate for an August month since at least 1980 as a record harvest dragged down food prices.

Year-on-year, cost of food and beverages went down 2.01 percent, following a 0.66 percent drop in July. It is the biggest fall since at least 1990. Additional downward pressure came from prices of furnishings and household equipment (-1.63 percent compared to -0.05 percent in July). In addition, cost rose at a slower pace for health (6.78 percent compared to 7.19 percent) and education (7.15 percent compared to 7.94 percent). On the other hand, inflation accelerated for housing (4.88 percent compared to 4.6 percent); transport (3.08 percent compared to 1.8 percent in July) and clothing (2.33 percent compared to 2.2 percent).

On a monthly basis, consumer prices went up 0.19 percent, below a 0.24 percent rise in July and lower than market expectations of 0.31 percent. Prices of food went down 1.07 percent, the fourth consecutive drop amid a record harvest. Main declines were reported for beans (-14.86 percent); tomato (-13.85 percent); sugar (-5.9 percent); milk (-4.26 percent); fruit (-2.57 percent) and meat (-1.75 percent). Additional downward pressure came from cost of communication (-0.56 percent). The biggest upward impact came form transport cost (1.53 percent), mainly due to a 6.67 percent rise in fuels.




Friday September 01 2017
Brazil Trade Surplus Beats Expectations
Joana Taborda | joana.taborda@tradingeconomics.com

The trade surplus in Brazil widened 35.3 percent year-on-year to USD 5.6 billion in August of 2017, above market expectations of a USD 4.1 billion surplus. The country’s trade balance has been in surplus since March of 2015.

Exports went up 14.7 percent year-on-year to USD 19.475 billion, mainly boosted by higher sales of primary articles (24.2 percent), manufactured (9.7 percent) and semimanufactured products (3.4 percent). Among major trading partners, exports increased to China (41 percent), Argentina (30.8 percent) and the US (2.2 percent)
 
Imports rose 8 percent to USD 13.876 billion, due to purchases of fuels and lubricants (56.6 percent), capital goods (6.6 percent), intermediate goods (4.8 percent) and consumer goods (1 percent). Among major trading partners, imports went up from China (22.5 percent) but fell from the US (-5.8 percent).
 
Considering the first eight months of the year, the country’s surplus increased 48.6 percent to USD 48.109 billion. Exports advanced 18.1 percent to USD 145.946 billion and imports went up at a slower 7.3 percent to USD 97.837 billion. 




Wednesday September 06 2017
Brazilian Economy Returns to Growth in Q2
IBGE | Joana Taborda | joana.taborda@tradingeconomics.com

The Brazilian economy advanced 0.3 percent year-on-year in the second quarter of 2017, following a 0.4 percent contraction in the previous period and beating market expectations of a flat reading. It is the first expansion since the first quarter of 2014 due to a rebound in household spending.

Household spending increased 0.7 percent, the first gain since the last quarter of 2014 amid a slowdown in inflation, lower interest rates and higher real wages. Exports rose at a faster 2.5 percent (1.9 percent in Q1) while imports contracted 3.3 percent (+9.8 percent in Q1). On the other hand, public spending (-2.4 percent compared to -1.3 percent) in Q1) and gross fixed capital formation (-6.5 percent compared to -3.7 percent) shrank more.

On the production side, agriculture drove the expansion (14.9 percent compared to 15.2 percent in Q1) and services declined less (-0.3 percent compared to -1.7 percent) while industrial production fell more (-2.1 percent compared to -1.1 percent in Q1).

On a quarterly basis, the GDP advanced 0.2 percent, following a 1 percent growth in the previous period and beating market expectations of a 0.1 percent expansion. 




Wednesday September 06 2017
Brazil GDP Growth Beats Expectations in Q2
IBGE | Joana Taborda | joana.taborda@tradingeconomics.com

The Brazilian economy advanced 0.2 percent on quarter in the second quarter of 2017, following a 1 percent growth in the previous period and beating market expectations of a 0.1 percent expansion. Household spending increased for the first time in 2-1/2-years while government spending declined more and investment continued to fall.

Household spending jumped 1.4 percent, the first gain since the last quarter of 2014 and the biggest since the first three months of 2014 amid a slowdown in inflation, lower interest rates and higher real wages. On the other hand, public spending fell 0.9 percent, following a 0.7 percent decline in the previous period and marking the fourth straight quarter of declines. Gross fixed capital formation went down 0.7 percent, following a 0.9 percent drop in the previous period and also the fourth straight decline. Exports rose a meager 0.5 percent, following a 5.2 percent jump in the previous period. Imports contracted 3.5 percent, following a 0.6 percent gain. 

On the production side, services drove the expansion (0.6 percent compared to 0.2 percent in Q1), namely internal trade (1.9 percent compared to -0.2 percent), real estate (0.8 percent compared to 0.2 percent) and transport (0.6 percent compared to 3.1 percent). On the other hand, agriculture stalled (+11.5 percent in Q1) and the industrial sector came back to contraction (-0.5 percent compared to 0.7 percent in Q1). Construction slumped 2 percent (-0.5 percent in Q1) and utilities declined 1.3 percent (+3.1 percent in Q1). In addition, manufacturing rose a meager 0.1 percent (1.1 percent in Q1) and mining growth slowed to 0.4 percent (1.8 percent).

Year-on-year, the economy advanced 0.3 percent, first expansion since the first quarter of 2014, following a 0.4 percent contraction in the previous period.





Thursday August 31 2017
Brazil Unemployment Rate Falls to 12.8%
IBGE | Joana Ferreira | joana.ferreira@tradingeconomics.com

The jobless rate in Brazil fell to 12.8 percent in the quarter ended July 2017 from 13.6 percent in the three months to April, better than market expectations of 13 percent.

Compared with the February-April period, the number of unemployed persons dropped 5.1 percent, or by 721 thousand, to 13.3 million. Employment increased by 1.6 percent, or by 1.4 million, to 90.7 million, with job gains in industry (3.7 percent), trade, repair of motor vehicles and motorcycles (1.3 percent), public administration, defense, social security, education, human health and social services (3.9 percent) and other services (4.1 percent). 

People attached to the labour force, that is, either employed or unemployed but actively seeking for job rose by 0.7 percent, or 718 thousand, to 104 million. Those detached from the labour force were unchanged at 64.4 million. 

Compared with the same period a year earlier, the number of unemployed people surged 12.5 percent while employment showed no growth.

The average real income usually received in all jobs by employed persons was estimated at BRL 2,106 in the quarter ended July 2017, almost unchanged compared to the previous quarter (BRL 2,111) and slightly higher than the same quarter of 2016 (BRL 2,045).




Wednesday August 09 2017
Brazil Inflation Rate Lowest Since 1999
IBGE | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in Brazil increased by 2.71 percent year-on-year in July 2017, slightly above market expectations of 2.66 percent and following an increase of 3.00 percent in the previous month. It was the lowest inflation rate since February 1999, as food prices fell for the first time since July 2006.

Cost of food and beverages fell 0.66 percent from the previous year, the first drop since July 2006 and following a 1.13 percent gain in June. Additional downward pressure came from furnishings and household equipment (-0.05 percent from -0.72 percent in June).

In addition, prices rose at a slower pace for: Transport (1.80 percent from 1.85 percent in June); health (7.19 percent from 7.44 percent); clothing (2.20 percent from 2.24 percent); and education (7.94 percent from 8.00 percent). Meanwhile, housing inflation accelerated to 4.60 percent from 2.62 percent in June.

On a monthly basis, consumer prices rose 0.24 percent, also above market consensus of 0.19 percent and following a 0.23 percent drop in June. Prices rose for housing (1.64 percent from -0.77 percent in June) and transport (0.34 percent from -0.52 percent), but fell for food and beverages (-0.47 percent from -0.50 percent).


Tuesday August 01 2017
Brazil Trade Surplus at Record High for July Month
MDIC | Joana Ferreira | joana.ferreira@tradingeconomics.com

Brazil trade surplus increased to USD 6.3 billion in July 2017 from USD 4.6 billion in the corresponding month a year earlier, but below market expectations of USD 6.4 billion. Still, it was the biggest surplus posted for a July month since the series began, as exports jumped 14.9 percent from the previous year to USD 18.8 billion while imports rose at a slower 6.1 percent to USD 12.5 billion.

Exports jumped 14.9 percent to USD 18.77 billion from USD 16.33 billion a year earlier, boosted by higher sales of primary goods (19 percent) and industrial products (11.5 percent), of which manufactured (12.6 percent) and semimanufactured (8.7 percent). Among major trading partners, exports increased to China (14.7 percent), the US (22.8 percent) and Argentina (47.9 percent).

Imports rose 6.1 percent to USD 12.47 billion from USD 11.75 billion in July 2016, as purchases rose the most for fuels and lubricants (57.2 percent), intermediate goods (6.8 percent) and consumer goods (3.5 percent). By contrast, imports of capital goods dropped 22.7 percent. Among major trading partners, imports went up from China (26.1 percent) and the US (4.4 percent), while those from the EU fell 10.2 percent.

In the first seven months of the year, the trade surplus widened to USD 42.5 billion from USD 28.2 billion in the same period of 2016, as exports increased 18.7 percent to USD 126.48 billion and imports grew 7.2 percent to USD 83.97 billion.


Friday July 28 2017
Brazil Jobless Rate Falls to 13% in Q2
IBGE | Joana Taborda | joana.taborda@tradingeconomics.com

The unemployment rate in Brazil dropped to 13 percent in the three months to June of 2017, below market expectations of 13.3 percent. The jobless rate declined for the third consecutive period after reaching a record high of 13.7 percent in the first quarter this year.

Compared with the first three months of the year, the number of unemployed fell by 4.9 percent to 13.486 million in the three months to June; employment rose 1.4 percent to 90.236 million and those detached from the labour force were steady at 64.415 million. 

Employment rose in trade (1.2 percent to 17.412 million); public administration, defense, social security (3.2 percent to 15.552 million); industry (3.3 percent to 11.755 million); domestic services (0.6 percent to 6.137 million); accomomdation and food (1.5 percent to 5.071 million); transportation and storage (2.9 percent to 4.623 million) and other services (5.6 percent to 4.468 million). In contrast, job losses were seen in information, financial and real estate activities (-1.2 percent to 9.82 million); agriculture (-0.3 percent to 8.652 million) and construction (-1.5 percent to 6.731 million). 

A year earlier, the unemployment was lower at 11.3 percent. 



Wednesday July 26 2017
Brazil Slashes Key Rate By 100 Bps To 9.25%
Mario | mario@tradingeconomics.com

The Central Bank of Brazil unanimously cut its key Selic rate by 100 basis points to 9.25 percent on July 26th of 2017, as widely anticipated. It was the seventh straight rate decline, bringing borrowing costs to the lowest since September of 2013 amid slowing inflation and a sticky contraction. The decision was unanimous and no bias was adopted. It follows a 100 bps cut in the May 31st of 2017 meeting.

The statement underscored that inflation developments remain favorable, as inflation expectations for 2017 fell to around 3.3 percent (vs 4.0 in May of 2017). The Copom views the heightened uncertainty regarding the speed of the process of reforms and adjustments in the Brazilian economy as the main risk factor, yet underscored that that the global outlook has been favorable and that changes in economic policy in some central economies have become less likely.

The central bank started its easing cycle in October last year after the inflation rate eased from double digits. Inflation slowed faster than expected in the past seven months due to subdued economic activity and a stronger real. Consumer prices in Brazil increased 3.0 percent year-on-year in June of 2017, below 3.6 percent in May and in line with market expectations of 3.06 percent. It was the lowest inflation rate since April of 2007, due to a slowdown in cost of food and a fall in electricity prices. The inflation rate slowed for the tenth straight month to the lowest since July of 2007, standing below the central bank target of 4.5 percent for the first time since December of 2009.

Still, the economic recovery is taking longer than initially expected, with mixed economic data clouding the horizon. Industrial Production in Brazil increased 4 percent in May of 2017 over the same month in the previous year, booking the highest annual gain since February of 2014. Contrastingly, the seasonally adjusted IHS Markit Brazil Manufacturing PMI fell to 50.5 in June 2017 from 52 in the previous month and below market consensus of 51. Moreover, Brazil's consumer confidence came in at 100.5 in June of 2017, barely unchanged from 100.6 in May, as political scandals and uncertainty continue to weigh. The median estimate in a central bank poll of economists currently points to growth of 0.34 percent in 2017 (vs 0.49 percent back in May of 2017) and 2.00 percent in 2018 (vs 2.48 percent). Analysts expect the Selic rate to end 2017 at 8.00 (vs 8.50 percent).