Digitization pulls service sector up 2.4% in November

The recovery of the service sector in Brazil continues to be influenced by the advancement of business related to the digitization of companies. In November 2021, the picture was no different, according to data released this Thursday (13) by the IBGE (Brazilian Institute of Geography and Statistics).

In comparison with October, the volume of the sector grew 2.4%, driven by the activity of information and communication services, which includes the area of ​​information technology.

The rise in the services sector came after two straight months of declines. With the advance in November, the segment recovered the loss of 2.2% that had been accumulated in September and October, says the IBGE.

The growth came well above the expectations of the financial market. Analysts consulted by the Bloomberg agency projected a slight increase of 0.2% in the month.

The 2.4% rise is the biggest since February 2021 (4%). Thus, the sector was 4.5% above the pre-pandemic level, recorded in February 2020.

The provision of services, however, still operates 7.3% below the record of the historical series, reached in November 2014.

The sector involves a wide variety of businesses, from bars, restaurants, hotels, beauty salons and gyms to financial, technology and educational institutions. It is also the main employer in the country.​

In relation to November 2020, the segment grew 10%, pointed out the IBGE. Analysts consulted by Bloomberg estimated a rise of 6.9% in this cut.

In 2021, the sector accumulated an advance of 10.9% until November. In a longer period of 12 months, the growth was 9.5%.

Information and communication are highlighted in the month

According to the IBGE, four of the five activities surveyed within services advanced in November, compared to October. However, only two of them are above pre-pandemic, which signals a still uneven recovery.

In November, the highlight came from information and communication services (5.4%), which recovered the 2.9% loss seen in the two previous months.

Activity is at a level 13.7% above that seen in February 2020. Within information and communication, information technology services rose 10.7%, the highest rate since January 2018 (11.8%), with 47 .4% above the pre-pandemic.

This performance drew attention in the month, pointed out Rodrigo Lobo, manager of the IBGE survey. According to him, the advancement of the IT area indicates that part of the companies is still looking for digitization, an accelerated trend in the pandemic.

The second positive impact among activities, in November, came from transport, which rose 1.8% and practically recovered the loss of 1.9% between September and October. The branch, which benefits from cargo transport, operates 7.2% above February 2020.

Services provided to families rose 2.8%. It was the eighth consecutive advance. This activity brings together companies greatly impacted by the restrictions on circulation in the pandemic, such as bars, restaurants, hotels, gyms and beauty salons. Services provided to families, however, are still 11.8% lower than in February 2020.

The activity of other services, in turn, grew 2.9% in November, recovering only part of the 12.6% drop between September and October. The branch is 2.5% below pre-crisis.

Professional, administrative and complementary services suffered the fourth negative rate in a row, 0.3%. The activity, which is down 4.2% from February 2020, acts as a kind of thermometer of economic activity, said Lobo.

This is because the professional, administrative and complementary branch involves face-to-face services provided to other businesses, in areas such as security and cleaning.

“Services of an in-person nature, such as those provided to families, were most impacted by the pandemic and are showing positive and significant rates. But they still do not operate at a level equal to or greater than February 2020”, pointed out Lobo.

“What brings the service sector to a level 4.5% above February 2020 are activities more focused on companies and that took advantage of opportunities in the pandemic”, he added.

Threats on the radar

In the second half of 2021, face-to-face activities began to focus on an improvement in business due to the boost in vaccination against Covid-19 and the reopening of the economy.

However, the recovery between the end of 2021 and the beginning of 2022 is threatened by the scenario of escalating inflation, higher interest rates and fragile income. Together, these factors diminish the purchasing power of consumers.

Another risk comes from the ômicron variant, identified as responsible for the new leap of Covid-19 in Brazil.

Restaurants and bars, for example, have had to dismiss employees due to coronavirus and flu cases in recent weeks.

The contamination of workers also caused airlines to cancel a number of flights at the start of 2022.

Lobo said that it is necessary to wait to find out if the Ômicron will reduce the growth or even generate a drop in the provision of services in the country. The IBGE researcher, however, acknowledged that the variant can cause a “negative impact” on activities.

“The cancellation of flights can imply in the abandonment of trips by families.”

The CNC (National Confederation of Trade in Goods, Services and Tourism) projects a 10.2% rise for the services sector in 2021, after a 7.8% drop in 2020. The advance, if confirmed, will be the largest in the series historical period, with data from 2011.

For 2022, the entity’s projection is for a 0.5% decline, in a context of loss of breath in the Brazilian economy.

According to CNC, after the month of November has exceeded expectations, the ômicron variant “tends to slow down the resumption of services”.

“The combination of a new variant and persistent inflation should slow the recovery in the first quarter”, says economist Fabio Bentes, from CNC.

He sees room for further advances in activities related to the technology area in the coming months, with heated demand from companies and the possibility of a drop in the movement of people due to the micron.

Before releasing the performance of services, the institute presented another sectoral indicator for November 2021: industrial production, which fell by 0.2%. It was the sixth consecutive low of the factories.

This Friday (14), it will be the turn of the IBGE to release the balance of retail sales in November.