Nov 12, 2014
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Brazil's retailers seen stuck in low gear in September

Nov 12, 2014

BRASILIA, Brazil - Retail sales in Brazil probably rose for a second straight month in September but advanced more slowly as consumer confidence hovered around five-year lows, a Reuters poll showed on Tuesday.

The median forecast of 29 economists polled was for an increase in sales volumes of 0.4 percent in September from August BRRSL=ECI, excluding automobiles and building materials. They rose 1.1 percent the prior month.

Brazil's biggest retailer, GPA SA, cut about 3,000 jobs from April to June.

Retail sales have weakened as job creation slowed and interest rates climbed, depriving Brazil's economy of its most reliable source of growth in recent years and contributing to a mild recession in the first half of the year.

Despite the recent rebound, retail activity is expected to remain below the levels seen in May, prior to the soccer World Cup.

Third-quarter retail growth may even be the weakest in a decade, according to Dev Ashish, an economist with Societe Generale. While commerce is poised for a soft recovery in coming months, it will probably give Brazil's economy only a modest boost through 2015, he added in a research note.

Economists have overestimated retail sales growth in five of the past seven months, according to Reuters polling data. Their forecasts for the month-on-month result missed the mark by 0.6 percentage point on average during the period.

The sharp slowdown in consumption has forced retailers to cut costs and offer aggressive promotions to protect profits. Brazil's biggest retailer, GPA SA, cut about 3,000 jobs from April to June.

Statistics agency IBGE releases its report on September retail sales on Friday at 9 a.m. (11:00 GMT).

When compared to September 2013, sales probably gained 0.7 percent BRRSLY=ECI, recovering from a 1.1 percent drop in the prior month, according to the median of 28 forecasts.

Forecasts for the monthly change in sales ranged from an increase of 1.1 percent to a drop of 0.6 percent. Estimates for the annual change ranged from an increase of 2.1 percent to a drop of 2.7 percent.

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