The Challenge of Seasonality

BRAZIL ECONOMICS - Report 18 Jun 2024 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

According to the Monthly Retail Trade Survey (PMC), broad retail fell 1% in April, a contraction following 2.5% growth in the first quarter. However, it is noteworthy the discrepancy between this result and the growth of restricted retail (0.9%), vehicles and parts (1.6%), and building materials (1.9%), which together account for 84% of the expanded retail index.

The result might initially be attributed to poor performance in the group "Wholesale Specialized in Food Products, Beverages, and Tobacco" (wholesale retail), whose sales were included in the series starting January 2023. However, we suspect seasonal adjustment issues may be behind the anomalous behavior in the series in April. In this case, the decline in broad retail would not reflect weaker activity but rather an improper seasonal adjustment.

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