UPDATE 1-Brazil consumer confidence drops to lowest in a year

Tue Feb 26, 2013 8:32am EST

* Think tank FGV says index falls for fifth straight month
    * Number reflects fragile economy


    By Silvio Cascione
    SAO PAULO, Feb 26 (Reuters) - Consumer confidence in Brazil
fell in February for the fifth month in a row to the lowest
since January 2012, a private survey showed on Tuesday in the
latest sign of a fragile recovery in Latin America's largest
economy.
    Brazilian think tank Fundação Getúlio Vargas (FGV) said its
consumer confidence index fell to a reading of 116.2
in February from 117.9 in the previous month, down 10 percent
from an all-time high in April.
    Household consumption, supported by low unemployment and
rising salaries, has been Brazil's main growth engine over the
past decade. It has also fueled inflation, as demand for many
services and goods increased at a faster pace than supply.
    The survey's barometer of the current economic situation
dropped to a reading of 128.9, from 131.9 in January, the lowest
since April 2010, while the gauge of future expectations slipped
to a reading of 109.6 from 110.5, the lowest in one year.
    
    Despite the drop, the index remained above its historical
average, FGV said in a report. 
    Consumer confidence could recover later this year as the
economy picks up steam following several stimulus measures by
President Dilma Rousseff's government, economists at Bradesco
said in a research note.
    "The index has been falling since the middle of last year
because of the economic slowdown. But it can rise again this
year as the economy recovers, given that the labor market
remains tight," wrote the economists.
    The jobless rate fell to a record low of 4.6
percent in December. It rose in January as businesses laid off
temporary workers following the holiday season, but was still
the lowest on record for the month. 
    FGV's consumer confidence survey is based on interviews
conducted with around 2,000 people in seven large Brazilian
cities between Jan. 31 and Feb. 23.
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