Services sector has 4th consecutive high and increases 1.1% in July | Economy

The volume of services provided in Brazil advanced 1.1% in July, compared to June, according to data released this Tuesday (14) by the Brazilian Institute of Geography and Statistics (IBGE). It was the 4th consecutive monthly high. With that, the sector reached the highest level in 5 years.

“The sector is 3.9% above the pre-pandemic level in February 2020, and also reaches the highest level since March 2016. Even with the advance, the sector is still 7.7% below the historical record, reached in November 2014”, informed the IBGE.

The service sector is the one with the greatest weight in the Brazilian economy.

The services sector registers fourth consecutive high in July — Photo: Economy/G1

The services sector was the most affected by the coronavirus pandemic and is on a path of recovery, favored by the advance of vaccination and the relaxation of restrictions.

Compared to July 2020, the increase was 17.8%, the fifth positive rate in a row.

In the year, the advance is 10.7%. In 12 months, the sector accumulated a gain of 2.9%, maintaining the upward trajectory started in February. See chart below:.

The indicator accumulated in 12 months jumped from June to July — Photo: Economy/G1

High only in 2 of the 5 major activities

The high in the sector in July was sustained by only two of the five activities, in particular, by services provided to families (3.8%). Professional, administrative and complementary services increased by 0.6% and surpassed, for the first time, the pre-pandemic level, 0.5% above February 2020.

“These two activities are precisely those that lost the most in the most acute months of the pandemic. These are activities with services of a face-to-face nature that gradually come with the flexibility and advancement of vaccination, trying to recover the loss caused between March and May of last year”, explains the research analyst, Rodrigo Lobo.

On the other hand, there was a decrease in the volume of information and communication services (-0.4%), transport, auxiliary services to transport and mail (-0.2%) and other services (-0.5%).

See below the variation of the subgroups of each major activity:

  • Services provided to families: 3.8%
  • Accommodation and food services: 4.4%
  • Other services provided to families: 0.9%
  • Information and communication services: -0.4%
  • Information and Communication Technology (ICT) Services: 0.4%
  • Telecommunications: 1.0%
  • Information Technology Services: 1.2%
  • Audiovisual, publishing and news agency services: -11.6%
  • Professional, administrative and complementary services: 0.6%
  • Technical and professional services: 4.4%
  • Administrative and complementary services: -0.6%
  • Transport, auxiliary services to transport and mail: -0.2%
  • Land transport: -0.2%
  • Waterway transport: 4.4%
  • Air transport: -7.8%
  • Storage, auxiliary services to transport and mail: -0.2%
  • Other services: -0.5%

Services provided to families remain below the pre-Covid level

In services provided to families, the advance was driven by the performance of the segments of hotels, restaurants, catering services and theme parks, which usually grow in July due to school holidays.

Despite the advance in July, services provided to families operate 23.2% below the level of February 2020, according to the IBGE. This is the only one of the five activities that has not yet surpassed the pre-pandemic level.

“This is understandable since this is the activity in which there is the greatest concentration of services provided in person. It is an activity that deals with supply restrictions. Some establishments have closed and others have reopened, but they are not yet operating at full capacity. On the demand side, there is pressure due to the lack of advance in the mass of household income and the high level of unemployment, which prevent this service from growing in the same way as the others within the sector”, says Rodrigo Lobo.

Discharge in 15 of the 27 Federation Units

The volume of services grew in 15 of the 27 units of the federation from June to July. The most relevant increases came from São Paulo (1.4%), followed by Rio Grande do Sul (3.4%), Minas Gerais (1.2%), Pernambuco (4.1%) and Paraná (1.5 %). The main fall was registered in Rio de Janeiro (-4.4%).

Tourist activities have 3rd high in a row

The index of tourist activities rose 0.5%, the third consecutive positive rate. The segment, however, still needs to grow 32.7% to return to the pre-pandemic level

Eight of the 12 regions surveyed had progress, with highlights for Pernambuco (9.5%), Santa Catarina (9.4%), Bahia (6.1%) and Rio de Janeiro (2.1%).

Last week, the IBGE showed that retail sales grew 1.2% in July, the fourth consecutive monthly increase.

The recovery of the services sector and the economy, however, is uneven, with activities of a more in-person nature without yet having managed to resume full operation.

In a scenario of increased uncertainty and worsening expectations due to political tension, the worsening of the water crisis and almost double-digit inflation in 12 months, the financial market has revised downwards its projections for the Brazilian economy.

For the Gross Domestic Product (GDP), analysts reduced the high estimate for 2021, from 5.15% to 5.04%. For 2022, the projection of economic growth dropped from 1.93% to 1.72%, according to the latest Focus survey by the Central Bank.

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