Brazil Trade Surplus, June 2008, Industrial Output and Retail Sales

Brazil's trade surplus narrowed to $2.7 billion in June from May as a rising currency and expanding domestic demand boosted imports. Imports rose to a record $15.9 billion from $15.2 billion in May, according to the trade ministry today. Exports fell to $18.6 billion from $19.3 billion. The May surplus was $4.1 billion.

Brazil's 12-month trade surplus narrowed to $30.8 billion in June, the smallest in four years, from $31.9 billion in May. The 12-month indicator has been shrinking since May 2007, when it peaked at $47.8 billion.

The Brazilian real has risen 20 percent against the dollar in the last 12 months, the best performance among the 16 most- traded currencies.

Brazil's industrial output expanded less than economists expected in May, possibly reducing the pressure on the central bank to accelerate interest-rate increases. Industrial production rose 2.4 percent in May on a year on year basis, down considerably on the revised 10 percent increase in April, according to the latest national statistics agency report.



One indicator that economic growth may now be slowing is that car production fell 5.5 percent in May from April. Another 15 of the 27 industrial activities tracked by the government also experienced monthly declines.


Further indication of the slowdown comes to us from Brazil's retail sales, which rose at the slowest pace in seven months in April, as rising consumer prices and tighter credit deterred household spending. The country's retail sales rose 8.7 percent in April year on year, down from a revised 11 percent gain in March.



Brazils central bank increased rates in June,to 12.25 percent from 11.75 percent, and it is clear more increases are in the pipeline. This batch of data may simply mean that rates neither rise so far, nor rise so fast as was previously being anticipated.