Brazil trade confidence slumps 3.1% in October – CNC

RIO DE JANEIRO, BRAZIL – The data were released Monday, October 25, in Rio de Janeiro, by the National Confederation of Commerce (CNC). The entity reported that the drop reflects a potential deterioration in the current conditions and in the economy’s performance. In the non-seasonally adjusted comparison, the index had no variation in the month.

The ICEC is an early indicator for retail and aims to detect the sector’s entrepreneurial activity trends. The survey is conducted with some 6,000 companies in all state capitals in Brazil. The indicator is monthly and ranges from 0 to 200 points, with a level considered satisfactory above 100 points.

The October negative result, despite Children’s Day, reverses the optimistic trajectory observed in June (12.2%), July (11.7%), and August (4.3%).

“The decline reinforces the perception that entrepreneurs’ objective conditions have become more difficult, most likely the result of the action of factors that influence the economy, such as the eventual end of the emergency aid transfer, followed by the resulting concern, the increase in family indebtedness, higher costs and interest, higher prices of inputs and industrial products, more expensive food, rents, energy, fuels and the dollar,” the CNC report explains.

According to the entity, smaller companies with up to 50 employees reported facing more adverse conditions than medium and large-sized ones. Inflation was a factor that impacted the indicator this month.

Among the ICEC components, the drops reached 4.5% in the current conditions and 3.1% in expectations. Investment intentions shrank by 2%. Compared to October 2020, the ICEC rose 15.6%.

REGIONAL CONFIDENCE

In October, the decline in business confidence was more pronounced in the South and Southeast regions, both at -3.7%, followed by the North (-3.4%). The Northeast dropped 2.8% and the Midwest 1%.

By company size, micro and small-sized companies moved into the zone above 100 points in July, staying within the confidence level for 4 consecutive months. In October, the drop reached 3% and the category stood at 119.1 points. For companies with over 50 employees, there was a -3.5% variation and the level stands at 125.8 points.

By category of goods, all remained in the satisfaction zone. The ICEC’s main negative contribution was seen in the durable goods segment (-4.2%) and the highest level of confidence is among semi-durable goods companies (124.6 points), after the 2.9% drop in October.

COMPONENTS

The Trade Entrepreneur’s Current Conditions Index (ICAEC) dropped 9% to 88.3 points in October, impacted by the economy’s objective conditions. In their perception of the economy, 52.3% of traders acknowledged the deterioration of current conditions and only 4.7% felt an improvement, with 43% pointing to a gradual improvement. In September, the pessimistic group reached 50.4%.

The Trade Entrepreneur Expectations dropped 3.1%, down in all three sub-components: economy (-4.6%), sector (-2.9%) and company (-1.8%). According to the CNC survey, entrepreneurs recognized that the scenario can improve, with 59.3% considering that the economy may advance somewhat and 26.6% believing that it can greatly improve.

In investment intentions, the hiring sub-component fell by 5.3% in October. Only 0.2% of entrepreneurs signaled that they may spend more on companies and 0.2% on inventories, with optimism pointing to preparations for Black Friday in November.

Concurrently, 66.7% of traders acknowledged that they may increase their workforce slightly by the end of the year and 12.9% should greatly increase hires.