Service sector confidence in Brazil falls in June amid pessimism about future expectations, says FGV.
The Services Confidence Index (ICS) fell 1,2 points to 90,7 points, virtually erasing all the gains recorded in May.
Reuters - Confidence in Brazil's services sector fell again in June amid deteriorating prospects for both the current and future situation, according to data released Friday by the Getulio Vargas Foundation (FGV).
In the month, the Services Confidence Index (ICS) fell 1,2 points to 90,7 points, virtually erasing all the gains recorded in May.
"The June results of the services survey reinforce the downward trend in confidence throughout the year," explained Stéfano Pacini, an economist at FGV IBRE.
FGV reported that the Current Situation Index (ISA-S), an indicator of perceptions about the present moment in the services sector, fell 1,5 points to 92,7 points, the lowest level since February 2022 (91,8 points).
Both components of the ISA-S declined in June -- the current demand volume indicator fell 2,5 points and the current business situation indicator dropped 0,5 points, both reaching 92,7 points.
Meanwhile, the Expectations Index (IE-S), which reflects outlook for the coming months, fell 1,0 point in the month, reaching 88,8 points.
Among the components of the IE-S, the indicator for expected demand in the next three months fell 2,7 points to 88,1 points, while the indicator for business trends in the next six months rose 0,7 points to 89,5 points.
"The worsening of the current business situation is heterogeneous and more intense in the professional services sector. Even with the maintenance of a heated labor market in 2025, companies expect a reduction in demand in the short term, revealing pessimism regarding the sector's future prospects," explained Pacini.
According to Pacini, the macroeconomic scenario, marked by price pressures and contractionary monetary policy, does not indicate a reversal of the trend in companies' expectations, which anticipate a slowdown in activity in the second half of the year.
Last week, the Central Bank decided to raise the Selic basic interest rate by 0,25 percentage points, to 15% per year, and highlighted that it anticipates an interruption in the interest rate hike cycle, considering that the rate should remain unchanged for a "quite prolonged period".
