The economy is shrinking and showing signs of weakness.

Brazilian economic activity contracted 0,12 percent in the third quarter compared to the previous three months, according to the Central Bank's Economic Activity Index (IBC-Br) released on Thursday, confirming expectations of weakness during the period.

November 14, 2013, 12:05 PMUpdated July 11, 2018, 10:23 pm

Employees work at a harvest machine assembly line at the Case Agricultural Machinery Plant in Sorocaba, 100 km (62 miles) west of Sao Paulo, September 18, 2013. For the first time in history, Brazil is expected to export more soybeans than its crushes dome (Photo: Gisele Federicce)

By Camila Moreira

SAO PAULO, Nov 14 (Reuters) Brazilian economic activity contracted 0,12 percent in the third quarter compared to the previous three months, according to the Central Bank's Economic Activity Index (IBC-Br) released on Thursday, confirming expectations of weakness during the period.

According to revised data, in the second quarter, the indicator, considered a preview of the Gross Domestic Product (GDP), showed an expansion of 0,84 percent compared to the first quarter.

In September, the IBC-Br showed stagnation, registering a negative variation of 0,01 percent compared to August, according to seasonally adjusted data, a result even worse than the most pessimistic expectation in a Reuters poll. The median estimate from 21 analysts was for an increase of 0,30 percent, with projections ranging from zero to a rise of 0,60 percent.

In August, also according to revised data, there was an increase of 0,09 percent, after an initial increase of 0,08 percent was reported.

The IBC-Br advanced 2,68 percent compared to September 2012 and has accumulated a 2,48 percent increase over 12 months, according to seasonally adjusted data from the Central Bank.

The main weight on the Brazilian economy comes from industry, which is finding it very difficult to establish a recovery in a year of erratic performance. According to IBGE, in September, Brazilian industrial production advanced 0,7 percent, recovering from two months of weakness, but the result fell short of expectations.

Retail sales grew for the seventh consecutive month in September, with a 0,5 percent increase, but the pace slowed and also fell short of expectations.

The Central Bank's Focus survey shows that the market expectation for GDP growth this year is 2,5 percent.

IBGE will release the GDP data for the third quarter on December 3rd. Between April and June, the Brazilian economy grew 1,5 percent compared to the first quarter.