November 12, 20 - 1:52 pm - Reuters

Service sector grows for the fourth consecutive month in Brazil, but it remains below pre-pandemic levels

The Brazilian service sector grew in September for the fourth consecutive month, but it still finds it difficult to recover the accumulated losses at the peak of the coronavirus pandemic.

In the month, the volume presented an increase of 1.8% in comparison with August, according to data released on Thursday by the Brazilian Institute of Geography and Statistics (IBGE).

Consumers make purchases on a commercial street in Rio
Consumers make purchases on a commercial street in Rio de Janeiro, September 2020. Photo: Reuters / Ricardo Moraes / File Photo

The sector, which has an important weight (about 70%) over the country’s Gross Domestic Product (GDP), presented losses of 19.8% from February to May, mainly due to the COVID-19 isolation measures, and is now seeking to recover as restrictions are lifted. Even so, the accumulated gains between June and September are only 13.4%, and the volume of services is still 18.3% below the historical record of November 2014, and 8.0% below February 2020.

In addition, the sector, which largely depends on face-to-face contact, accumulates a contraction of 8.8% in the year.

The greatest difficulty of services in reacting is due to the presence of the services provided: accommodation, tourism, bars, restaurants and others

Ricardo lobo, the manager of the monthly research of the service sector at IBGE.

In September, there was an increase in four of the five activities surveyed. The other services sector had an increase of 4.8% in comparison with the previous month, being the only one to overcome the pre-pandemic level and reaching the highest level since October 2014, reflecting the increase in financial and auxiliary services.

“Companies in this segment have been seeing revenue increases since the second half of 2018 due to the consistent reduction in the Selic rate, which reduced savings gains and led economic agents to seek more attractive investment alternatives, whether fixed income or variable, ” said Lobo. “Companies that act as intermediaries in this fundraising process, such as securities brokers and stock exchange administrators, have obtained significant revenue gains due to the increased demand for higher-yielding assets,” added the researcher.