SAO PAULO: Retail sales in Brazil likely grew in September for the fourth month in a row as low unemployment and rising wages continued to support supermarket sales, a Reuters poll showed.
However, the increase was probably not enough to offset a drop in industrial output in the same month and support the economy - highlighting the uneven nature of Brazil's recent growth and suggesting that economic activity sputtered as the third quarter ended.
Retail sales likely rose 0.3 percent in September from August on a seasonally adjusted basis, following an increase of 0.2 percent in the previous month, according to the median of 35 forecasts.
When compared with September 2011, sales likely grew by 8.7 percent, slowing from a rise of 10.1 percent in the prior month, the median of 31 forecasts showed.
Most of the increase should be attributed to a rise in supermarket sales, which account for about half of the core retail index. Supermarket sales grew by 0.2 percent from August and 4.9 percent from September 2011, according to the national supermarket association Abras.
Nearly 30 million people were lifted out of poverty in the past decade in Latin America's largest economy, increasing demand for goods and services. That supported steady economic growth until 2010 and helped Brazil avert a recession in recent months as industries were hit by the global economic slowdown.
Unemployment also remained near record lows, reaching 5.4 percent in September.
In September, though, the rise in retail sales was probably not enough to support the economy against a 1 percent drop in industrial output. The median of 19 forecasts for the central bank's IBC-Br economic activity index projects a contraction of 0.5 percent from August.
Itau Unibanco analysts said in a research note that the setback in economic activity may be just an accommodation from previous months. "Yet the uncertainty about the timing of an expected recovery in investment imparts downside risks for the economy, both for Q4 and 2013," they wrote.
Brazil's economy is expected to grow by 4 percent in 2013, accelerating from a 1.5 percent expansion forecast for this year, after the central bank cut benchmark interest rates 10 times in a row to a current record-low 7.25 percent.
The retail sales index excludes building materials and automobiles. Taking both into account, sales likely tumbled 4.9 percent from August, according to the median of 16 forecasts, as the boost from temporary tax breaks on cars started to fade.
Car sales recovered in October, but remained below their August peak, national automakers' association Anfavea said last week.
Brazil's statistics agency IBGE will release September retail sales data on Tuesday at 9 a.m. local time (1100 GMT).
Forecasts for the month-on-month data ranged from a drop of 0.2 percent to an increase of 1.1 percent, while estimates for the year-on-year gain varied from 7.5 percent to 13.4 percent.
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