A Notable Surge in Brazil’s Service Sector: A June 2024 Analysis

In June 2024, Brazil’s service sector experienced a significant growth of 1.7% from the previous month, marking the largest increase since December 2022, which had seen a 2.7% rise.

This increase was particularly noteworthy after a slight decline of 0.4% in May. The Brazilian Institute of Geography and Statistics (IBGE) reported these figures, highlighting a resilient upward trend in the sector.

By June, the sector was performing 14.3% better than its pre-pandemic levels in February 2020. When compared year-over-year to June 2023, there was a growth of 1.3%.

Despite this positive movement, the sector’s growth over the last twelve months slowed slightly, moving from 1.2% in May to 1.0% in June.

This recent performance exceeded analysts’ expectations. The LSEG consensus had predicted a modest 0.8% monthly growth. The annual forecast was similarly set at a 0.8% increase, both of which were surpassed.

Each of the five surveyed service activities showed growth in June. Notably, the transport sector led with a 1.8% increase, a rebound from a 1.5% decline in May.

‘This recovery was largely driven by a drop in airfare prices, alongside gains in pipeline transportation and maritime support navigation, closely linked to the extractive industries.

Detailed Sector Insights:

• Transportation:

Passenger transport volumes rose by 6.2% from May to June, recovering from a 6.7% decrease the previous month.

This sector was 1.9% above its February 2020 levels but still 21.2% below the peak of February 2014. Cargo transport modestly increased by 0.4% in June after a 0.5% decline in May, though still 6.8% below its July 2023 peak.

• Tourism:

The tourism sector saw a 3.4% increase in June over May, rebounding from a 0.9% drop from April to May. This segment stood 7.7% above its pre-pandemic levels and just 0.1% below its historical peak in February 2014.

Regionally, every one of the 12 areas surveyed showed growth, with Rio Grande do Sul and Rio de Janeiro leading the way.

Despite mixed performances across different regions, the first half of 2024 showed overall positive trends in tourism, with notable increases in Minas Gerais and Bahia.

However, the Rio Grande do Sul region experienced significant challenges, with a notable 16.0% drop influencing the overall statistics negatively.

• Looking Ahead:

Starting in September 2024, the Monthly Services Survey will expand its tourism activity index from 12 to 17 regions, adding data from Amazonas, Pará, Rio Grande do Norte, Alagoas, and Mato Grosso.

This expansion indicates a robust commitment to understanding and fostering growth within Brazil’s diverse service sectors, suggesting continued strategic emphasis on this crucial area of the economy.

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