Brazil’s Service Sector Grows in May, but Signs of Slowdown Emerge

Brazil’s service sector, which makes up about 70% of the country’s economy, continued to grow in May 2025, according to official data from the Brazilian Institute of Geography and Statistics (IBGE).

The sector’s activity rose 0.1% from April, matching its highest level ever, but this was less than experts expected. Compared to May 2024, services grew 3.6%, marking over a year of steady annual gains.

Professional and administrative services led the growth, up 0.9% in May and 2.9% over the last four months. Information and communication services also rose slightly, while transport services fell 0.3% and services for families dropped 0.6%.

The decline in transport came mostly from weaker logistics and shipping. High interest rates are starting to weigh on the economy. Brazil’s central bank raised its main rate, the Selic, to 15% in June to fight inflation.

This makes loans more expensive and can slow business activity. However, not all services feel the impact equally. Technology and professional services keep growing, while sectors that depend on family spending, like tourism and personal care, are under more pressure.

Brazil’s strong job market is helping the sector. More people have formal jobs and higher wages, which supports demand for services. In 2024, services created more than half of all new jobs.

For 2025, forecasts suggest Brazil will add between 1.2 and 1.5 million new formal jobs, mostly in services. Still, growth is slowing. The government expects the overall economy to grow between 2.2% and 2.5% in 2025, down from 3.4% in 2024.

The service sector remains the backbone of Brazil’s economy, but the latest figures show it is not immune to rising costs and tighter financial conditions.

The numbers point to a sector that is still growing, but at a slower pace. Professional and tech services are holding up, but areas linked to household spending are feeling the pinch.

As Brazil faces higher borrowing costs and less government support, the service sector’s ability to keep growing will be key for the country’s economic health.

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