Service sector grows 1.7% in March and closes 1st quarter in blue | Economy

The volume of services provided in Brazil grew 1.7% in March, in comparison with February, as announced this Thursday (12) by the Brazilian Institute of Geography and Statistics (IBGE). It was the second high in a row and the best result for the month of March since 2011, when the historical series of the survey began.

In comparison with March last year, the high was 11.4%.

“With this result, the sector recovers the loss of 1.8% in January, reaches the highest level since May 2015 and is 7.2% above the pre-pandemic level”, highlighted the IBGE.

THE result came better than expected. The median of 26 estimates from consulting firms and financial institutions compiled by Valor Data was up 0.9% in March, compared to February.

The IBGE revised the February result, which went from a fall of -0.2% to a rise of 0.4%.

“We attribute this good performance of the service sector, above all, to those services provided to companies, less to services provided to families, the only one of the five segments of the sector that has not yet recovered the pre-pandemic level”, pointed out the research manager, Rodrigo Lobo.

In the year, the volume of services provided in the country rose 9.4% compared to the same period in 2021. In 12 months, the accumulated increase went from 13% in February to 13.6% in March, maintaining the upward trajectory that began in February 2021.

The sector reached the highest level since May 2015, but still remains 4% below the highest point in the historical series, recorded in November 2014.

The service sector is the one with the greatest weight in the Brazilian economy and has shown an uneven recovery, with services provided to families still running at a level of activity below the pre-pandemic standard.

Increase of 1.8% in the 1st quarter

The sector closed the 1st quarter with an increase of 1.8%, in comparison with the 4th quarter of 2021. This is the 7th positive result in the comparison quarter with the immediately previous quarter.

In comparison with the first 3 months of last year, there was an increase of 9.4%.

See the result in each of the segments in March

  • Services provided to families: 2.4%
  • Accommodation and food services: 1.4%
  • Other services provided to families: 8.5%
  • Information and communication services: 1.7%
  • Information and communication technology (ICT) services: 3%
  • Telecommunications: -0.4%
  • Information technology services: 2.7%
  • Audiovisual services: 6.1%
  • Professional, administrative and complementary services: 1.5%
  • Technical-professional services: 4.3%
  • Administrative and complementary services: -1.1%
  • Transport, auxiliary transport services and mail: 2.7%
  • Land transport: 2.3%
  • Water transport: -8.1%
  • Air transport: 15.6%
  • Storage, auxiliary transport services and mail: 1.8%
  • Other services: 1.6%

All five activities investigated by the survey grew in the month, with emphasis on transport (2.7%), information and communication services (1.7%) and services provided to families (2.4%).

“Among the sectors that most influenced the rise in this activity is the road freight, especially that linked to electronic commerce and agribusiness. It is the main mode of cargo transport in Brazilian cities and its use has become even more pronounced after the most crucial months of the pandemic”, explains the research manager, Rodrigo Lobo.

Passenger air transport, according to the researcher, also had a positive influence on the March result. In addition to the increase in passenger flow, which increased airline revenue, there was a direct impact from the drop in air ticket prices observed in March.

Household consumption far from recovery

With the March result, the service sector, which was the most affected by the social isolation measures imposed by the pandemic, started to operate 7.2% above the level of February 2020. However, this recovery is uneven between the segments of services provided in the country and highlights the difficulty that Brazilians face to recover their income.

Of the 5 major activities in the service sector, only those provided to families did not recover the pre-pandemic level, operating, in March, 12% below February 2020.

“This is because of the magnitude of impact that this sector has suffered from the need for social isolation, reduced displacement of people and total or partial closure of services considered non-essential”, recalled the researcher.

According to Lobo, conjunctural factors, such as the deterioration of the job market and the persistent and generalized rise in prices in the country, hamper the financial capacity of a large part of the Brazilian population.

“Economic inequality in Brazil is also related to this issue. Most services provided to families, such as hotels, restaurants, gyms, are consumed by the classes with greater purchasing power. basic necessities, such as food, for example”, highlighted the researcher.

Among all activities in the service sector, information technology services is the one with the best performance, surpassing the pre-pandemic level by 45.2%. According to the IBGE researcher, this reflects the great demand for digitalization of services imposed by the health crisis, changing the profile of the sector.

Tourist activities grow 4.5% in March

The index of tourist activities increased 4.5% in March. Even with the increase, the segment is still 6.5% below the pre-pandemic level.

“The indicator follows in the wake of services provided to families and transport, also growing in March, influenced by the increase in air transport, restaurants, hotels and catering services”, highlighted the researcher.

High interest rates and persistent inflation have taken away the purchasing and consumption power of families, affecting the prospects for economic growth in 2022.

Industrial production grew 0.3% in March and closed the 1st quarter in blue, but remains below the pre-pandemic level.

Trade, on the other hand, advanced 1% in March and recorded the 3rd consecutive high, closing the quarter with a high of 1.9%.

The financial market currently estimates a growth in Gross Domestic Product (GDP) of 0.70% in 2022. For inflation, the projection is 7.89%, but good art of analysts already sees an IPCA above 8% in the year .

As for the Selic, the expectation is that the Central Bank will continue to raise interest rates in the face of persistent inflation, which for 8 months has remained above 2 digits.

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