Confidence in the services sector has fallen and begins the year at its lowest level since 2021, says FGV.
Economist cites "signs of pessimism for the sector, with assessments of a widespread worsening of demand in the coming months across all segments"
Reuters - Confidence in Brazil's services sector fell in January and started the year at its lowest level since May 2021, according to data released Thursday by the Getulio Vargas Foundation (FGV).
In the month, the Services Confidence Index (ICS) fell 2,5 points to 91,8 points, marking the third consecutive decline.
"The first result of the year points to a worsening of service sector confidence, reflected by the contraction in both the current situation and future expectations. This indicates pessimism for the sector, with a widespread assessment of worsening demand in the coming months across all segments," explained Stéfano Pacini, economist at FGV IBRE.
The Current Situation Index (ISA-S), an indicator of perceptions about the present state of the services sector, fell 2,6 points in January, reaching 94,7 points.
The Expectations Index (IE-S), which reflects the outlook for the coming months, also fell by 2,6 points, to 89,0 points.
"On the other hand, the perception of the current situation is improving in some activities, such as services provided to families, which still registered an increase in confidence during the month. The macroeconomic scenario of good results in terms of employment and income is a positive factor, but the high level of interest rates and high uncertainty may contain the demand for services during the year," Pacini assessed.
The day before, the Central Bank raised the Selic basic interest rate by 1 percentage point, to 13,25% per year, as it had signaled at the previous meeting, while members confirmed that they expect to carry out another increase of the same magnitude at the next meeting in March, leaving the next steps open.
