Brazil economic activity posts solid start to third quarter

By Bruno Federowski

SAO PAULO (Reuters) - Economic activity in Brazil expanded at a faster pace than expected in July, suggesting the economy got off to a solid start to the third quarter despite a string of mixed reports.

Economic activity rose 0.41 percent in July after seasonal adjustments. The median forecast in a Reuters poll indicated a 0.10 percent monthly advance in July.

The central bank also revised the previous month's reading to show a 0.55 percent increase, bigger than the originally reported 0.50 percent rise.

That should bring some solace to those worried that a nascent economic recovery may have hit a bump following tepid readings on retail sales and services activity.

Latin America's largest economy has been crawling out of the deepest recession in a century, which drove inflation to 18-year lows and allowed the central bank to cut interest rates to the lowest levels since 2013.

Slow price increases and low borrowing costs have stimulated consumer spending, which lifted second-quarter gross domestic product (GDP) growth above analyst expectations.

Economists expect that to underpin a steady economic rebound going forward, but investments should recover slowly as companies prioritize cutting debt.

The central bank's activity index rose 1.48 percent from the year before, compared to a 0.8 percent increase in June.

(Reporting by Bruno Federowski; Editing by Chizu Nomiyama)

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