Brazil Economic Activity Index Falls 0.11% in May

Brazil's economic activity fell for the second month in a row in May, a central bank index showed on Thursday, Reuters reported. The IBC-Br economic activity index, a leading indicator of gross domestic product, fell a seasonally adjusted 0.11% in May from the previous month. The April drop was revised to 0.64% from the previously reported 0.44%. Services activity rose much more than expected in May, while retail sales and industrial output growth came below market estimates. The IBC-Br index increased 3.74% on a non-seasonally adjusted basis from May 2021, while in the 12 months through May the index was up 2.66%, the central bank said. Lower than expected unemployment and the normalization of a range of activities after the blow from the pandemic have supported stronger activity so far. This has occurred despite an aggressive monetary policy cycle to tame double-digit inflation in Latin America's largest economy. In the second half of the year, analysts predict that the economy will gain additional steam from tax cuts on key goods, such as fuel and energy, and a spending aid package approved by Congress to increase income transfers to the poorest and benefit specific groups, such as taxi and truck drivers. Read more.