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Length-of-Service Guarantee Fund and Holiday Boost Retail, but Rise Is Short-Breathed

06/14/2017 - 12h05

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FLAVIA LIMA
FROM SÃO PAULO

Driven by food and clothing sales, retail registered a significant rise in April.

But the advance was greatly favored by transitional conditions such as the release of money from the inactive Length-of-Service Guarantee Fund (FGTS, in its Portuguese acronym) accounts and the Easter holiday, signals that the boost is short-breathed and very dependent on another factor: employment.

In April, the increase in retail trade was 1% in comparison to March and 1.9% compared to the same period of last year, interrupting 24 months of negative rates, according to IBGE (Brazilian Institute of Geography and Statistics).

One of the relevant points is that the April increase was not spread by all sectors of commerce

The positive surprise was powered by the supermarket sector that, according to Itaú Unibanco, accounted for almost half (0.4 percentage points) of the expansion registered in April over March.

Of the eight segments of commerce analyzed by IBGE, half registered decrease. Even with the rise observed in April, the retail sales level is almost 10% below its historical peak, reached in November 2014.

In the annual comparison, recalls Thais Zara, chief economist at Rosenberg Associates, Easter explained much of the positive variation, the highest in two years.

Jankiel Santos, an economist at the Haitong Bank, says that income-related goods - such as supermarket sales - have shown a more rugged recovery than those who respond better to credit, such as automobiles.

According to him, it is possible to say that the sector hit rock-bottom, but leaves it walking "inch by inch, and not meter by meter".

Translated by MARINA DELLA VALLE

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