The current pace of job creation is consistent with GDP growth of 2.1% in annualized terms.
Continued loosening of the labor market, weaker consumer sentiment and higher short-term inflation could curb consumption growth ahead.
Looking ahead, despite some encouraging signs from 3Q19, recent disruptions would deny the persistence of the recovery through 4Q19.
Notwithstanding the temporary hiatus, important data are expected for the rest of the week.
Looking ahead, despite some encouraging signs from 3Q19, recent disruptions would deny the persistence of the recovery through 4Q19
On the other hand, the medium-term outlook remains broadly anchored.
Data reinforce positive trend in consumer spending in the country.
GDP expanded 3.3% in 3Q19 (3.0% in 2Q19), in line with expectations and the highest rate since 2015.
Data reinforce positive trend in consumer spending in the country.
After this release, our 3Q19 GDP tracking increased slightly to 0.44% qoq/sa from 0.40% qoq/sa.
After this release, our 3Q19 GDP tracking increased slightly to 0.44% qoq/sa from 0.40% qoq/sa.
Going forward, we expect a 50-bp rate cut, to 1.25%, at the December meeting.
Going forward, we expect a 50-bp rate cut, to 1.25%, at the December meeting.
Electricity tariff hikes, rise to air travel, and a higher-than-expected spike in tourism packages lifted inflation in the month.
Electricity tariff hikes, rise to air travel, and a higher-than-expected spike in tourism packages lifted inflation in the month.
Previously, we were expecting a 25-bp cut, with the central bank accelerating the pace of monetary policy easing at the December meeting.
Despite the surprise, October's report was another sign that inflation remains on a benign path.
In a weaker-than-expected outcome, 2 of the 4 exploratory blocks were sold with small participation from foreign parties.
The bidding round will take place at 10:00 BRT.
Signing bonuses totaled BRL 69.9 billion, below the BRL 106 billion expected by the government
The document reinforced the expectation of an additional 50-bp cut at December’s meeting, but indicated caution going forward.
At the margin, activity fell 0.6% from August, the first monthly decline since February.
At the margin, activity fell 0.6% from August, the first monthly decline since February, as mining fell sharply and non-mining activity also contracted.
Going forward, our preliminary forecast for 3Q19 GDP was revised to +0.4% qoq/sa (from +0.5% previously).
The two components of industrial production closely related to investment remain broadly stable at low levels.
The minutes of the meeting will be released today.
Unemployment will fall only gradually, but the informal employment is lowering, giving room to formal jobs.
The Copom delivered the widely expected decision, cutting the Selic rate by 50 bps, in a unanimous decision.
The committee decided to lower the Selic rate with a 50-bp cut, as widely expected.
Importantly, the expectations component of all confidence indexes decreased in October, with the biggest drop registered in today’s print.
Piñera will change the ministers of the Interior, Finance, Economy, among others government members.
The installed capacity utilization level (NUCI) increased 0.3 p.p., to 75.8%, still suggesting a wide slack in production factors.
In a short and moderate victory speech, Alberto Fernandez said there are difficult times ahead.
Piñera will change the ministers of the Interior, Finance, Economy, among others government members.
In all, today’s indicator will help to counterweight the falling trend observed in other confidence indexes so far.
The real wage bill is still helping to smooth the slowdown in the country’s private consumption
The bank also noted that additional easing could be required to ensure inflation converges to the target, hinting at another cut ahead.
Uncertainties over the direction of domestic policy and trade relations with the U.S. are weighing on investment
The voting on the highlights is set to continue today.
After a lengthy process, the main measure of the ongoing fiscal adjustment in the country is finished.
The breakdown shows that the print was driven by a drop both in the current conditions and in the expectations component.
Weaker-than-expected deflation in food at home prices was behind the deviation from our call.
Our preliminary estimates point at 50bp lower growth in October, likely shaving a couple of basis points for the entire year.
Our preliminary estimates point at a 50bp lower growth in October, likely shaving a couple of basis points for the entire year.
Solid import growth amid a double-digit export drop led to the largest August trade deficit on record.
The current level of job creation is consistent with GDP growth of around 1.9% in annualized terms.
The ruling implies that reform-related revenue received to date can be retained (and for the remainder of 2019).
Consumer prices rose markedly in September, fully reflecting the depreciation of the ARS in the previous month.
The bill now heads to presidential sanction
With private consumption continuing to surprise to the upside, we note that activity growth this year could exceed our 3% forecast
This result follows weaker-than-expected readings registered in the retail and services indicators for August
The breakdown shows that three out of the five main categories declined
Compared to August 2018, the index dropped 0.73%, virtually in line with our forecast (-0.8%) and weaker than the market’s (-0.5%).
Despite the result, consumption remains in an upward trend.
Service revenues decreased in August, contributing to the weak monthly GDP proxy (PIB-IU) in the period.
Looking forward, withdrawals from the workers’ severance fund (FGTS) will likely provide a temporary boost to retail sales in coming months.
All core measures remain at comfortable levels, around 3% year-over-year.
All core measures remain at comfortable levels, around 3% year-over-year.
From a monetary policy standpoint, this print consolidates our view of a 25-bp rate cut, to 1.75%, later this month.
Weakness in external demand and uncertainties over the domestic policy and trade relations with the U.S. are weighing on investment.
From a monetary policy standpoint, this print consolidates our view of a 25-bp rate cut, to 1.75%, later this month.
Looking forward, we expect GDP growth of 0.4% for 2019.
Food, housing and education prices lead the gain in the month.
See our Week Ahead full note at the end of this report.
The Senate’s Speaker, Davi Alcolumbre, has declared his intent of starting the discussions of the second-round of voting today
Surprisingly upbeat August activity means growth could come in a tick above our 2.2% forecast for the year.
Surprisingly upbeat August activity means growth could come in a tick above our 2.2% forecast for the year.
There are still 6 amendments to be voted, which is expected to take place today at 11:00 AM
The Senate’s Speaker, Davi Alcolumbre, has declared his intent of resuming the discussions for the second-round of voting tomorrow.
Despite the improvement, a favorable fiscal scenario depends strictly on the approval of reforms, such as the pension reform.
Looking at the breakdown, the increase in industrial production was not widespread, as just 10 out of 26 activities (38%) expanded during the month.
The underemployment rate, which also considers people working for fewer hours than they would like, reached 24.3%.
A favorable fiscal scenario depends strictly on the approval of reforms, such as the pension reform
According to our seasonally-adjusted series, unemployment rose to 12.0% from 11.9%.
The probability of a lower policy rate than that we currently forecast is increasing.
The probability of a lower policy rate than that we currently forecast is increasing.
The final indicator printed slightly better than the preview released last week, but remains at low levels.
This level of job creation is consistent with GDP growth of around 1.4% in annualized terms.
The capacity utilization for the sector declined 0.2 p.p. (to 69.4%).
Despite the negative result, the trend looking forward remains positive.
The minutes reinforced the likelihood of a 50-bp cut in October, but limited the indication of even lower interest rates, for now.
Despite tilted balance of risks, rates are likely to remain stable until yearend.
Consumer confidence improves in Brazil, but still at a weak level
The final survey result will be published on Thursday, and, given the small decline in today’s result, may indicate a different trend.
No relief for the economic downturn. We recently adjusted our GDP forecasts down to -2.5% (from -1.4%).
Higher-than-expected inflation due to the depreciation of the peso reduced the money supply, leading to an excessive monetary contraction.
The statement indicates that another 50-bp “adjustment” of the base rate is likely in the October meeting.
We will publish an in-depth report on Copom’s decision later tonight.
The backdrop of a continued easing cycle has not changed significantly since the last policy decision, on July 31, when the Selic was cut by 50 bps.
Additionally, Petrobras will not adjust fuel prices in the domestic market, despite oil prices soaring after the attacks in Saudi Arabia.
We expect the Copom to cut the Selic rate again, to 5.50%, at tomorrow's meeting.
The year-end Selic rate forecast declined 25 bps to 5.0% for 2020 amidst a sluggish economic recovery and benign inflation outlook.
The economic recovery is still slow and relatively erratic.
The weak BCB’s index goes against the stronger-than-expected increases registered in the retail and services indicators for the same period.
The more important components for our GDP tracking declined in the month, but the drop was softer than previously expected.
The more important components for our GDP tracking declined in the month, but the drop was softer than previously expected
Credit-linked sales continue to grow faster than income-sensitive ones, given the slow-paced employment recovery.
Credit-linked sales continue to grow faster than income-sensitive ones, given the slow-paced employment recovery.
The change goes in line with our view that the global slowdown, along with disappointing domestic dynamism, justifies additional rate cuts.
The change goes in line with our view that the global slowdown, along with disappointing domestic dynamism, justifies additional rate cuts.
Moderating inflation means higher odds of further monetary easing, likely already in September.
Moderating inflation means higher odds of further monetary easing, likely already in September.
Lower food and transport prices offset the upward pressures stemming from changes in electricity tariff flag prices.
Despite an expected improvement of growth pace data in 3Q19, activity remains structurally weak, paving the road for additional easing ahead.
Lower food and transport prices offset the upward pressures stemming from changes in electricity tariff flag prices
Weak activity corroborates the central bank signaling that additional easing may be necessary to ensure inflation converges to the target
The text will now head to the Senate’s floor
The committee is currently voting on the amendments and once the voting process is concluded, the text will head to the Senate’s floor.
The press release communicating the decision holds an easing bias, so even further cuts could materialize ahead.
July’s print showed no signs of recovery in the industrial sector, renewing expectations of a slow-paced activity recovery in the short term
29% consider his administration as “good” or “excellent”, somewhat lower than the 33% observed in the latest Datafolha poll, from July 4 and 5.
President Macri signed an executive order on Sunday to implement controls, a couple days after the country announced a debt restructuring.
In our view, the room to avoid capital controls was very limited.
Going forward, we expect the unemployment rate — under our seasonal adjustment — to finish the year at 11.8%.
The administration is sending legislation to Congress to engage in a re-profiling of the remaining debt
Economy Minister Lacunza announced a rescheduling of amortization payments of short-term local law bills denominated in pesos and in dollars
Our GDP growth forecasts are 0.8% in 2019 and 1.7% in 2020
The breakdown shows that the decline was driven by the expectations component
The result went in the opposite direction of other business sectors and consumer sentiment indicators, which improved in the month.
The capacity utilization for the sector advanced 0.7 p.p. (to 69.6%), the fifth consecutive increase
A plain sale of reserves to the market hadn’t took place since 2009.
The installed capacity utilization level increased slightly to 75.8%, still suggesting a slack in production factors.
The breakdown shows increases in both the current conditions (+1.2 p.p.) and the expectations component (+0.4 p.p.)
Retail confidence advanced 3.2 p.p. in August (to 98.7), the third consecutive increase.
The breakdown shows that the movement was driven by the current conditions component
Despite the increase, the index remain at a weak level.
For the time being, our full-year estimates for the IPCA are 3.6% for both 2019 and 2020
Uncertainties regarding the ability of the federal government to service public debt will likely continue, with adverse consequences for the peso and inflation
Relative to 2018, we expect private consumption to moderate its pace in 2019
This level of industrial business confidence is still low, consistent with a decline of 0.3% qoq/sa in industrial production.
The breakdown shows an increase in both the current conditions and the expectations components.
Overall, the economy continues to grow at a weak pace, hinting that demand-side inflationary pressures are low.
Fitch downgraded Argentina's sovereign debt from B to CCC.
We now see the policy rate ending this year at 7.25%.
In the statement announcing the decision, the rating agency highlighted the uncertainty following the results of the primary elections.
A meaningful activity acceleration in 2H19 remains elusive as consumer confidence stays low, the labor market weak and global growth slows.
We now see the policy rate ending this year at 7.25%.
Activity came in mixed at the end of the second quarter, with retail sales remaining strong, while the manufacturing drag intensified.
According to the press, the government will announce today a battery of measures to alleviate markets.
Industrial production, retail sales and trade balance will be published at 12:00 AM.
The changes follow the presidential primary elections held on Sunday, which showed a very different outcome than anticipated by pollsters.
See our Week Ahead full note at the end of this report.
Since Friday, the ARS weakened 23%, to 55.7 per USD. The interest rate paid on the 7-day Leliq rose to 74.8% from 63.7%, while the 5-year CDS hit 2,000 points.
Our forecasts remain at 3.6% for both 2019 and 2020.
At the margin, the indicator declined 1.0% mom/sa, taking the 3-month moving average to -0.2%.
The bill now heads to the Senate, where it will need to be approved by three-fifths majority in two rounds of voting once more.
Our forecasts remain at 3.6% for both 2019 and 2020.
There were 370 votes in favor and 124 against the proposal, both somewhat below the numbers of the first vote on the bill.
Broad retail sales were flat (+0.0%) in the month, while core retail sales expanded 0.2% mom/sa, both below market expectations.
The document also brought a lengthy, and interesting, assessment of the effects of social security reform on neutral rates.
Despite a more favorable base of comparison and added stimulus measures, sufficient headwinds would limit the recovery ahead
See our Week Ahead full note at the end of this report.
The non-mining GDP component posted its first monthly decline this year.
The components more closely related to investment (construction inputs and capital goods) also receded in the month, with no signs of recovery.
Low private confidence, a volatile external scenario, contained copper prices, and a weak labor market have resulted in an activity slowdown.
The components more closely related to investment also declined in the month, with no signs of recovery.
The Copom reduced the interest rate by 0.50 pp and signaled an additional adjustment of the same magnitude at the next meeting.
In our view, recent data are consistent with the start of a more intense easing cycle, with a 50-bp cut in the Selic rate.
Later tonight, we will publish a more in-depth report on the Copom’s decision.
The breakdown shows that the increase was driven both by the current conditions and the expectations component.
The breakdown shows that the increase was driven both by the current conditions and the expectations component.
Despite the decline, the final indicator printed better than the preview released last week.
Despite the decline, the final indicator printed better than the preview released last week, when industrial confidence fell by 1.7 p.p.
See our Week Ahead full note at the end of this report.
Confidence in the sector accelerated further from June, but remains at pessimistic levels.
The breakdown shows that the increase was driven both by the current conditions and the expectations component.
Despite the acceleration, the current level of formal job creation is consistent with a still-timid 1.0% GDP growth, in year-over-year terms.
The Economic Policy Secretary, Adolfo Sachsida, stated that this measure may increase GDP by 0.35% between 2019 and 2020
Although small, the drop halts the recovery trend seen in June, when confidence indicators from almost all sectors registered increases.
Weak consumer confidence, labor market, and lower global growth make us believe a meaningful and durable activity acceleration this year is unlikely.
After the release of today's result, we revised slightly our estimate for the headline IPCA in July to 0.20%.
The low level of confidence is consistent, in our calculations, with a 0.4% qoq/sa decline of industrial production in the month.
With the result, confidence in the industrial sector continues to show no signs of a rebound.
Looking forward, we expect the policy rate to reach 2.0% by yearend, with the next cut likely in September.
See our Week Ahead full note at the end of this report.
We expect stable rates at this meeting
Pessimism has reigned for consumers in 9 of the last 10 months.
Pessimism has reigned for consumers in 9 of the last 10 months.
Moderate disinflation will likely continue in July.
Both BCB and Itaú's monthly GDP indicators increased in May.
Consumer prices decelerated for the third consecutive month in June.
Both BCB and Itaú's monthly GDP increased in May.
Now, the second round of voting is very likely to take place only in August.
On Wednesday, the House concluded the first round of voting on the base text, with 379 votes in favor and 131 against the proposal.
See our Week Ahead full note at the end of this report.
Last night, the House concluded the first round of voting on the base text, with 379 votes in favor and 131 against the proposal.
The plenary started to analyze the highlights, and, possibly later this week, will move on to the second round of voting
The Lower House is currently analyzing the requirements and, once this step is completed, the plenary will be able to vote the main text.
According to local news, the Lower House is set to begin in the next hours the first round of voting on the pension reform.
Downbeat private sentiment amid an uncertain global scenario justify our 2.4% growth call for this year.
Given our outlook of a growth slowdown this year, we do not expect a notable acceleration of inflation.
See our Week Ahead full note at the end of this report.
The Lower House will probably start to analyze the proposal on Tuesday
It will be important to monitor how these steps will evolve, in order to gauge the timing of the first Lower House floor vote.
The committee is now voting on the amendments, which might be concluded today
After this result, our GDP tracking for 2Q19 increased slightly, to 0.3% qoq/sa (from 0.2% previously)
For 2019, we see GDP growth of 2.4%, down from 4% in 2018
Industrial production declined 0.2% mom/sa in May.
We forecast a 0.6% decline on seasonally adjusted terms.
The median of the Selic rate expectations declined to 5.50%, from 5.75%.