June 13, 2019 / 1:04 PM / a year ago

UPDATE 1-Brazil services activity grows 0.3% in April, first rise this year

(Adds detail, context)

By Jamie McGeever

BRASILIA, June 13 (Reuters) - Services activity in Brazil rebounded in April from a sharp fall in the previous month, government statistics agency IBGE said on Thursday, marking the first rise this year, although growth was slower than economists had expected.

Activity also shrank more than forecast on an annual basis, suggesting the economy started the second quarter on a weak note, having contracted in the first quarter for the first time in more than two years.

Brazil’s service sector, which accounts for almost three quarters of national economic activity, grew by a seasonally adjusted 0.3% in April from March, IBGE said, breaking a run of three consecutive monthly declines.

That followed a steep fall of 0.8% in March, which was revised down from a fall of 0.7%, but was lower than the median estimate in a Reuters poll of economists for a rise of 0.4%.

Compared with the same month last year, services activity fell 0.7%, IBGE said. In the four months to April, activity grew by 0.6%, and in the 12 months to April it was up 0.4%.

In terms of sectors, three of the five tracked by IBGE expanded in April compared with March. They were information and communication services, up 0.7%; professional and administrative services, up 0.2%; and services provided to families, up 0.1%.

On the other hand transport and services related to transport and mail fell 0.6%, and other services fell 0.7% on the month.

The figures appear to show the economy is turning around, and that recession is not in the cards. Certainly, it is one of the few bright spots among the second quarter economic activity and survey indicators released so far.

Still, the pace of recovery, particularly from an extremely weak prior month, the year-on-year decline and slowing accumulated growth all suggest the economy is struggling to gain momentum.

The central bank will release on Friday its IBC-Br economic activity index for April, widely seen as a good indicator for where gross domestic product growth is generally headed. (Reporting by Jamie McGeever; Editing by Bernadette Baum)

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