Brazil May economic activity falls unexpectedly as recovery seesaws

[July 14, 2017]  SAO PAULO (Reuters) - Economic activity in Brazil fell in May for the second month in three, adding to mixed signals about the emergence of Latin America's largest economy from a long and harsh recession.

 A worker makes soles during a shoemaking process at a factory in Novo Hamburgo, in the state of Rio Grande do Sul August 4, 2010. REUTERS/Nacho Doce

The IBC-BR index, a gauge of manufacturing and services activity, fell 0.51 percent in May from April after seasonal adjustments, the central bank said on Friday. Economists surveyed by Thomson Reuters expected a median increase of 0.50 percent in the index.

This month, a series of economic indicators have shown diverging trends, underscoring Brazil's uneven, slow recovery from the worst recession in more than a century. Recent government data pointed to a steady revival in industrial output, while showing an unexpected decline in retail sales.

Consumption has sputtered over the past year as the recession, which probably ended in the first quarter, left a record 14 million Brazilians unemployed. Economists expect consumer spending to start recovering in the coming months as interest rates and inflation drop, helping the economy gain speed.

(Reporting by Guillermo Parra-Bernal; Editing by Chizu Nomiyama and Jeffrey Benkoe)

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