Brazil economic activity edges down in July: central bank

September 19, 2016 8:47 AM EDT

A woman looks on prices at a food market in Rio de Janeiro, Brazil, January 21, 2016. REUTERS/Pilar Olivares/File Photo

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BRASILIA (Reuters) - Economic activity in Brazil edged slightly lower in July, falling short of predictions of a rise and pointing to enduring weakness in Latin America's largest economy, government data showed on Monday.

The 0.09 percent drop in the central bank's IBC-Br index followed a 0.37-percent increase in the preceding month. A Reuters poll of economists had forecast a 0.25 percent rise in economic activity in July.

Compared with a year earlier, the IBC-Br index fell 5.2 per cent.

The IBC-Br is a gauge of activity in the farming, industry and services sectors.

"Activity is likely to contract again in August given, among other things, the expected sizable contraction of industrial production," Goldman Sachs economist Alberto Ramos wrote in a client note about the IBC-Br data.

While Monday's data did not break down economic activity by sector, the government's IBGE statistical agency earlier reported that industrial output firmed 0.1 percent up in July but retail sales slid 0.3 percent in the same month.

Brazil is in its second year of its worst recession in at least eight decades. Economists have forecast a mild recovery will start in 2017, underpinned by a recent improvement in confidence indexes and industrial investment.

(Reporting by Silvio Cascione; Editing by Chizu Nomiyama and W Simon)

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