Brazil Services Sector Falls 4 Percent in Last 12 Months

By Jay Forte, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The volume of the services industry in Brazil fell by four percent in February, compared to the same period of 2015. According to a report released today (April 13th) by the Brazilian Institute of Geography and Statistics (IBGE) the services sector accumulated a decline of 4.5 percent in the year, with a 3.7 percent drop over the last twelve months.

The result of Pesquisa Mensal de Serviços (PMS) – or Monthly Services Survey – recorded the drop of 3.7 percent, but after deducting the inflation of the nominal revenue, the decline is 4.5 percent according to the study.

The drop in the volume of services was seen in five of the six segments evaluated by the IBGE survey. The largest decreases were observed in “other services” (-6.1 percent) and information and communication services (-5.3 percent).

After those, the services industry segments with significant declines were; professional, administrative and complementary services (-4.3 percent), transport, auxiliary transport and postal services (-2.0 percent) and household services (-1.4 percent). The only increase was registered in the aggregate of “tourist activities”, which saw a growth of 1.3 percent.

British expatriate living in Rio, and founder of the ENGLISH4 language services, Ed Horgan, explained what he has seen in the last twelve months. “There has been a drop in general English inquiries but an increase in requests for specialized exam preparation. In these times it’s important to maintain regular clients in addition to diversify into various sectors not just oil and gas. Also, to avoid price rises.”

In the calendar year of 2015 the service sector’s volume shrank 3.6 percent in 2015, the worst result of the series started in 2012 and the first to stay in negative territory. In the previous year, the volume of services ended 2014 with expansion of 2.5 percent. Nominal revenue recorded a high 1.3 percent in 2015. In 2014, sales of services advanced six percent.

Although economists had predicted a decline in the Brazilian Gross Domestic Product (GDP) for 2015, in early March the official amount released on Thursday by the IBGE (Brazilian Statistics Agency) was gloomier than forecasted. According to the IBGE, Brazil’s GDP registered a decline of 3.8 percent in 2015, totaling R$5.904 trillion, the greatest decline since 1990.