Brazil’s service sector grows 1.7% in June and posts 3rd straight monthly increase

RIO DE JANEIRO, BRAZIL – Brazil’s service sector expanded in June for the 3rd consecutive month and well above expectations, closing the second quarter 2.4% above the pre-pandemic level and at its highest in 5 years, IBGE (Brazilian Institute of Geography and Statistics) data released on Thursday show.

The volume of services grew 1.7% in June compared to the preceding month, well above projections for a 0.2% increase.

IBGE data show that the sector closed the period from April through June up 2% over the first quarter, when a 3.1% increase was recorded.

Helped by the country’s advance in vaccination against the coronavirus, the sector not only widened the distance from its pre-pandemic level, but also reached its highest since May 2016.

“The highest point in the series that began in 2011 was recorded in November 2014, and this June 2021 figure is at the highest level since May 2016, albeit still distant (9.1%) from November 2014,” explained survey analyst Rodrigo Lobo.

“The sector’s rebound to this level reflects a recovery of in-person services, such as those provided to households, tourism, and transportation. They are still operating below the pre-pandemic level, but they are recovering,” he added.

The most affected sector by the Covid-19 pandemic containment measures and with greater difficulties to rebound, services also registered a 21.1% increase in relation to June, against the expected 17.5%.

The increase was widespread in June, with all 5 activities posting growth. The highlight was information and communication services, up 2.5% and reaching the highest point in its series.

“Communication services, software, search engines, and information technology were actually benefited by the pandemic, all of which work with computerization and technology and do not rely on in-person consumption, use low-scale, lower-cost labor,” Lobo said.

In other activities, transportation, auxiliary services to transport and mail posted gains of 1.7%; household services rose 8.1%; professional, administrative, and complementary services rose 1.4%; and other services increased 2.3%.

The tourism activities index increased 11.9% in June compared to May, the second consecutive positive rate. But according to IBGE, tourism still needs to grow 29.5% to return to the pre-pandemic level of February 2020.