Brazil’s services sector confidence improves in August to highest in almost 8 years

RIO DE JANEIRO, BRAZIL – Brazil’s services sector in August registered a rise in confidence to the highest level in almost eight years, given the improvement in the volume of work as the economy reopens.

The Getulio Vargas Foundation (FGV) reported on Monday that its Services Confidence Index (SCI) rose 1.3 points to 99.3 points, the highest level since September 2013 (101.5 points). It was the fifth straight monthly rise, with the indicator consolidating above the pre-pandemic level.

“Contrary to what has been observed in recent months, the rise was more influenced by the improvement in the volume of services in the month, while expectations were stable. This combination suggests that the sector’s recovery has been advancing in parallel to the easing in the pandemic,” Rodolpho Tobler, an economist at FGV Ibre, said in a note.

FGV data show that the Current Situation Index (ISA-S), an indicator of the perception about the present moment of the services sector, rose 2.6 points, to 93.0 points, the highest level since June 2014.

In the month, the Expectations Index (IE-S), which reflects the outlook for the coming months, gained 0.1 points, at 105.7 points, remaining at the highest level since November 2012.

“It is worth noting that the scenario for the coming months still depends on the recovery of consumer confidence and carries a lot of uncertainty, especially associated with the risks of the Delta variant,” added Tobler.

FGV also informed that the balance of expected employment, which corresponds to the percentage of companies that plan to increase their staff in the coming months discounted from the percentage of entrepreneurs who plan to reduce it, reached 10.4 points in August, the highest result since May 2014.

Brazil’s service sector activity recorded gains in June for the third month in a row and well above expectations, with a 1.7% rise over the previous month, ending the second quarter 2.4% above the pre-pandemic level and at the highest level in five years, according to IBGE data.