BRASILIA, Dec 13 (Reuters) – Economic activity in Brazil rose more than expected in October despite a slowdown in retail sales, official data showed on Friday, suggesting a slight recovery after Latin America’s top economy contracted in the third quarter.

The Brazilian central bank’s IBC-Br economic activity index rose 0.77 percent in October from September in seasonally adjusted terms.

The median estimate in a Reuters survey of 20 analysts was for an increase of 0.5 percent. The index, a gauge of activity in the farming, industry and services sectors, had a minor upward revision to 0.01 percent in September.

After accelerating in the second quarter, the Brazilian economy shrank 0.5 percent in the third quarter versus the second quarter as high inflation and dwindling business confidence weighed on investment.

Economists expect the economy to grow again in the last quarter of the year, but at a sluggish pace. The economy is forecast to grow 2.35 percent this year, according a weekly central bank survey.

Retail sales in Brazil expanded at the slowest pace in seven months in October.

The IBC-Br index rose a non-seasonally adjusted 2.74 percent over the same month a year ago.