Itaú BBA - Retail sales rise in March and continue upward trend

Macro Brazil

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Retail sales rise in March and continue upward trend

May 11, 2018

Better than expected result, driven by vehicles and fuel

Core retail sales climbed 0.3% mom/sa in March, beating the median of market expectations (0.2%) and our estimate (0.1%). 

Broad retail sales (including vehicles and construction material) increased 1.1% during the month, also topping the median of market expectations (0.7%) and our call (0.8%).

The March increase was relatively widespread, with monthly gains in 6 out of 10 segments that form broad retail.

For the time being, we forecast gains of 2.5% mom/sa in core retail sales and 3.3% in broad sales in April.

Quarterly change accelerates slightly vs. 4Q17

Core retail sales went up 0.3% mom/sa in March, above the median of market expectations (0.2%) and our estimate (0.1%). Compared to March 2017, core sales expanded 6.5%. The February reading was revised upward by 0.2p.p.

Broad retail sales climbed 1.1% mom/sa, also beating the median of market expectations (0.7%) and our call (0.8%). Compared to March 2017, broad retail sales grew 7.8%. The February result was revised upward by 0.1p.p.

In 1Q18, core retail sales advanced 0.7% and broad sales expanded 1.0% vs. the average for 4Q17, reflecting slight acceleration vs the previous quarterly growth (0.0% and 0.8%, respectively). 

Breakdown shows that auto sales and fuels were key drivers of the March reading

Six out of ten broad retail components posted seasonally-adjusted monthly increases in March, consistent with the 1.1% hike in the headline result. 

Auto and fuel sales stood out during the month. On the opposite end, falling sales in hypermarkets and supermarkets (-1.1% mom/sa) deepened the gap with the sales index calculated by supermarket association ABRAS, which was up by 1.8% during the same period.

Coincident indicators point to a higher retail sales in April

Coincident indicators out so far (vehicle sales, surveys with consumers and retail entrepreneurs, Serasa retail index and consults to SCPC) suggest that core retail sales climbed 2.5% mom/sa in April, while broad sales expanded 3.3%. 
 

Artur Manoel Passos
Alexandre Gomes da Cunha


 



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