November 14, 2017 / 11:47 AM / a year ago

UPDATE 1-Brazil retail sales rebound in September as spending rises

SAO PAULO, Nov 14 (Reuters) - Brazilian retail sales rebounded in September from an unexpected drop in the prior month as lower unemployment provided a welcome boost to consumer spending.

Sales volumes, excluding cars and building materials, rose 0.5 percent in September from August after seasonal adjustments, government statistics agency IBGE said on Tuesday.

The reading exceeded economists’ median forecast of a 0.40 percent increase in a Reuters poll, and bucked a two-month string of underwhelming figures that had stoked concerns over Brazil’s recovery from its worst recession in a century.

This suggests the outlook for a gradual economic pickup, underpinned by newfound strength in the labor market, low inflation and interest rates bound for all-time lows, remains intact.

Retail sales increased 6.40 percent from the year before, compared to the median forecast of 5.20 percent.

Five of the eight product categories tracked by IBGE rose in the month, with supermarket sales providing the biggest boost to the wider indicator. In a statement, IBGE economist Isabella Nunes said falling joblessness and increased income should stoke demand for household staples.

Most economists expect recent signs of economic strength to continue in the coming months but inflation to remain subdued as employment gains have concentrated on off-the-books jobs.

Brazil’s gross domestic product is seen rising 0.73 percent this year, then accelerating to 2.50 percent in 2018, according to a weekly central bank survey of economists, after plummeting 8 percent between the fourth quarter of 2014 and end-2016. (Reporting by Bruno Federowski; Editing by Bernadette Baum)

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