Brazil’s Central Bank Activity Index Rises 0.3% in August

Overview

• The Central Bank released data Friday showing the IBC-Br, its monthly preview of GDP, increased 0.3% in August on a seasonally adjusted basis, the first monthly gain after a 0.3% drop in July.
• Industry led the advance with a 0.9% rise and services grew 0.2%, while agriculture fell 1.8% and taxes edged up 0.1%; the index excluding agriculture also rose 0.3%.
• On a quarterly basis the IBC-Br remained weak, with the quarter ending in July down 0.3% versus the prior quarter, which signals the rebound has not yet reversed the short-term contraction.
• Reports differ slightly on 12-month and year-to-date aggregates — outlets published figures of about 1.2%–1.6% — a result of different presentations (seasonally adjusted versus unadjusted and year-to-date framing) rather than a contradiction in the source release.
• Policymakers will watch these early signals closely because the IBC-Br feeds Central Bank deliberations over the Selic rate and because fiscal stimulus that boosts demand can push up prices and influence borrowing costs for households and businesses.