Brazil: Consumer and industrial sentiment deteriorate in June
Latest reading: The seasonally adjusted consumer confidence index published by the Getulio Vargas Foundation (Fundação Getúlio Vargas) fell to 85.9 from 86.7 in May, ending a three-month streak of gains. As a result, the index moved further below the 100-point threshold, indicating starker pessimism among Brazilian consumers.
Similarly, the seasonally adjusted industrial business confidence index fell to a 14-month low of 96.8 in June, down from May’s five-month high of 98.9. As such, the index moved further below the 100-point threshold, signaling worsening pessimism among industrial firms.
Outlook: Despite ending Q2 on a sour note, consumer sentiment averaged above Q1 levels in Q2, boding well for consumer spending in the quarter. Meanwhile, industrial sentiment averaged slightly below Q1 levels, pointing to additional headwinds to investment in Q2. Moreover, both indicators remained in pessimistic territory due to the highest interest rates since mid-2006, prospects of rates remaining elevated for a prolonged period of time and high inflation—factors likely to keep a lid on sentiment in the coming months.