The performance of the service sector above expectations in December points to a scenario of more heated economic activity in the country at the end of 2021, say analysts.
According to them, the high of 1.4% in the volume of the sector, in comparison with November, reinforces the bets of GDP (Gross Domestic Product) with positive variation in the fourth quarter of last year.
The picture, however, is still far from causing excitement. There is a risk that economic activity will lose steam in the first quarter of 2022, analysts point out.
What causes concern at the beginning of the year is the combination between higher interest rates, the effects of which tend to be intensified, and persistent inflation. Together, the factors play against consumption and productive investments.
The performance of the service sector in December was released this Thursday (10th) by the IBGE (Brazilian Institute of Geography and Statistics). The variation of 1.4% far exceeded the expectations of the financial market. Analysts consulted by the Bloomberg agency projected an increase of 0.6%.
“The data on services showed a slightly better scenario than expected for the end of last year”, says the chief economist at Banco Inter, Rafaela Vitoria.
According to her, after the disclosure of services, the bank should raise the estimate for the GDP of the fourth quarter of 2021. The forecast should go from 0% to up to 0.3%.
Before releasing the results of services, the IBGE informed that the industrial production grew 2.9% in December, also above forecasts. Retail sales fell 0.1%, less than expected.
“It’s a better picture than expected at the end of 2021, but the film in 2022 should be different. We are in a beginning of the year with high inflation and higher interest rates”, says the chief economist at Veedha Investimentos, Camila Abdelmalack.
“There was a repressed consumption of services, and we saw this during the second half of last year, with the reopening of the economy”, he adds.
Veedha projects an advance of 0.2% for GDP in the fourth quarter of 2021, but the number may even be a little higher after the disclosure of services performance, according to Camila.
For now, Rio Bravo Investimentos also estimates a 0.2% advance in the period. There is a possibility that the number will be revised upwards, around 0.3%, according to economist Luca Mercadante.
“The stronger-than-expected data in sectors such as services, at the end of 2021, show the effects of the reopening of the economy”, he analyzes.
“Although they were positive, these results should not represent a trend reversal”, ponders the economist.
The consultancy MB Associados, in turn, maintains the GDP projection with a positive variation of 0.1% in the fourth quarter of 2021. In practice, the number represents a stagnation of the Brazilian economy, says the chief economist at MB, Sergio Vale .
According to him, the effects of higher interest rates and persistent inflation tend to slow down economic activity in the first months of 2022. Last week, the BC (Central Bank) raised the basic interest rate, the Selic, to 10.75%.
“We had very good data in part of the activities [no final de 2021], but this is not a trend. Now, the impact of higher interest rates should appear more intensely”, says Vale.
The official GDP result for the fourth quarter will be released by the IBGE in March.
Services are up 10.9% in 2021
After suffering a record drop of 7.8% in 2020, the volume of the service sector grew 10.9% in 2021, according to the IBGE. In percentage terms, the increase is the largest in the historical series, which began in 2012.
According to Rodrigo Lobo, manager of the IBGE survey, the double-digit rise is largely explained by the weakened comparison base, as the sector was the most impacted in 2020 by the arrival of Covid-19.
“The service sector was most impacted by the beginning of the pandemic due to the face-to-face nature of some activities”, he said. “The basis of comparison is quite depressed,” he added.
With the December result, the sector was 6.6% above the pre-pandemic level, recorded in February 2020. It also reached the highest level since August 2015. However, it is still 5.6% below the series record, registered in November 2014.
The service sector involves a wide variety of businesses, from bars and restaurants to financial, technology and educational institutions. It is also the main employer in the country.
According to the IBGE, what took the service sector to a higher level than the pre-coronavirus was mainly the positive impact of activities that depend less on the circulation of customers and that are aimed to a large extent at companies.
Among them are information and communication services, which are at a level 12.8% above the pre-crisis level. This activity involves, for example, telecommunications, information technology and audiovisual services.
In-person services also showed a resumption throughout 2021, in a context of advancing vaccination against Covid-19 and fewer restrictions on companies. This reaction, however, is still incomplete.
Services provided to families, for example, grew 0.9% in December, the ninth positive rate in a row. Despite the improvement, they are still 11.2% below the pre-pandemic level.
In a note, the CNC (National Confederation of Trade in Goods, Services and Tourism) assessed that the performance of the sector as a whole was benefited by the reopening of the economy in 2021. However, the entity projects a loss of breath for services in 2022.
“Considering the forecasts of low economic growth for 2022, the expectation is that tertiary activities will not present rates close to last year”, points out the entity.
“Given the rising cost of credit and inflationary resilience for a longer period, CNC revised from -0.5% to -0.8% its forecast for the services sector this year”, he adds.​
Like services, industrial production and retail sales also grew in 2021, but at a slower pace, according to the IBGE.
After two years of decline, factory production rose 3.9% between January and December. The advance was also largely associated with a depressed baseline. Industrial production is still 0.9% below pre-pandemic.
Retail sales increased by 1.4% in 2021. In December, trade was 2.3% below the pre-crisis level.
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