By Camila Moreira and Rodrigo Viga Gaier
SÃO PAULO/RIO DE JANEIRO (Reuters) – The Brazilian services sector recorded a sharp contraction in volume in January, starting the year on a negative note after reaching the highest point of the historical series in December, in a scenario of challenges with the increase in interest rates and the loss of strength of the global economy.
In January, the volume of services in the country dropped by 3.1% compared to the previous month, the Brazilian Institute of Geography and Statistics (IBGE) reported this Friday, the highest negative rate since March 2021, the period of the second wave of Covid-19, and the worst result for the month in the series, which started in 2011.
In comparison with the same month of the previous year, however, there was expansion of 6.1%.
The services sector is coming from two years in a row of positive results fueled by the reopening of the economy after the Covid-19 pandemic, but this year it should not gain much more strength, since, like the rest of the economy, it starts to feel the lagged effects of rising interest rates in the country, in addition to the slowdown in the global economy, are further strengthened.
“The January result corroborates our view that the resilience demonstrated by services throughout 2022 will start to diminish from now on”, said in a note Claudia Moreno, economist at C6 Bank. “But the positive effect of the reopening has already dissipated and now the sector should start to feel the effects of high interest rates more strongly.”
According to the survey manager, Rodrigo Lobo, the fall in January eliminates the accumulated gain of 3.0% in the last two months of 2022. He points out, however, that the basis for comparison is at a high level.
“The services sector remains very close to its series high, reached last month, which puts it at a level 10.3% above the pre-pandemic level,” he said.
“It is too early to talk about an inflection in services due to this fall in January. We need to wait for more data to know if it was a one-off thing or if over time it will move away from the December peak”, added Lobo.
Earlier this Friday, the retail sales index calculated by the means of payment company Cielo and calculated from 1.1 million retailers in the country, ICVA, showed a drop of 2.6% in the service sector in March over a year earlier, after discounting inflation.
TRANSPORTS
The IBGE highlighted the performance of the transport sector, auxiliary services to transport and postal services, whose 3.7% drop in volume exerted the greatest negative influence on the month’s result.
“The sector’s fall is explained by the storage part, which retreated 9.0%, with a negative highlight for port and terminal management; as well as passenger air transport, which dropped 5.9% in the month”, explained Lobo.
The sector of other services was also negatively highlighted, with a decrease of 9.9% in January over December, in a movement resulting from atypical revenues received in the previous month by companies that operate in the segments of auxiliary financial services.
The index of tourist activities, in turn, increased by 0.5% compared to the immediately previous month, the second consecutive positive result, accumulating gain of 5.3%.
According to the IBGE, the tourism segment is 2.5% above the February 2020 level and 4.6% below the highest point in the series, reached in February 2014.
The IBGE also explained that this was the first release of the new survey series, which included updates in the selection of the sample of companies, adjustments in the weights of products and activities, in addition to methodological changes, to portray economic changes in society.
With the changes, the IBGE started to evaluate streaming companies, transport applications and delivery and product delivery companies, according to Lobo.
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