UPDATE 3-Brazil economy picks up in Q3, but recovery uneven
* IBC-Br activity index rises 1.15 pct in Q3 versus Q2
* Activity drops 0.52 pct in September versus August
* Monthly drop fuels worries over strength of recovery
By Alonso Soto
BRASILIA, Nov 14 (Reuters) - The Brazilian economy gained speed in the third quarter versus the previous one, central bank data showed on Wednesday, but weaker activity in September suggests the path toward a full-fledged recovery remains rocky.
The central bank's IBC-Br economic activity index fell 0.52 percent in September from August in seasonally adjusted terms -- its first drop after five consecutive monthly increases. The median estimate in a Reuters survey of 22 analysts was for a drop of 0.60 percent.
The index, a gauge of activity in the farming, manufacturing and services sectors, rose 1.15 percent in the third quarter versus the second quarter, indicating Brazil is recovering after nearly a year of stagnation.
In the second quarter, Brazil's gross domestic product expanded just 0.4 percent from the first quarter, according to the government's statistical agency IBGE.
"We see a recovery, but its not going to be a as strong as some had previously expected," said Carlos Kawall, c hief economist with Ba nco J. Safra i n Sao Paulo. " The big question mark here is investment. Until now we have not seen signs of a more robust recovery on the investment front."
Government officials have acknowledged that the economy could slow in the fourth quarter after surging in the third quarter due to the slew of tax breaks that prompted Brazilians to buy everything from freezers to cars and wallpaper.
Finance Minister Guido Mantega said earlier this week that the GDP, a broader measure than the IBC-Br, likely grew just over 1 percent in the third quarter versus the previous quarter. He added that the economy could grow more than 4 percent in 2013 if investment responds to the tax benefits.
A struggling local industry coupled with the global slowdown has dragged down the Brazilian economy, which until recently was considered a star along with the likes of large emerging market nations like China and Russia.
This year the economy is expected to grow just 1.5 percent.
Still, most analysts see the Brazilian economy recovering to about 4 percent growth in 2013 after a year of non-stop fiscal and monetary stimulus. So me are less optimistic and like Banco J Safra's Kawall see the economy expanding 3.5 percent next year.
The index was revised slightly down in August to a gain of 0.95 percent from 0.98 percent.
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