Service sector disappoints expectations and drops 0.2% in February

The volume of the service sector in Brazil fell by 0.2% in February, compared to January, reported this Tuesday (12) the IBGE (Brazilian Institute of Geography and Statistics).

This is the second negative rate in a row. Thus, the sector accumulated a loss of 2% in the first two months of this year.

The February result came below financial market expectations. In the median, analysts consulted by the Bloomberg agency projected an advance of 0.7%.

Even with the setback, the segment is still 5.4% above the pre-pandemic level of February 2020.

The service sector involves a wide variety of businesses: from bars, restaurants and hotels to financial institutions, technology and transport companies.

In comparison with February 2021, the volume of the segment marked the 12th consecutive positive rate. The advance was 7.4%. Analysts had forecast a higher increase of 8.5%, according to Bloomberg.

This Tuesday’s release is the first after the IBGE updated the survey’s seasonal adjustment model. According to the institute, the procedure is standard in surveys of this type and seeks to improve the information evaluated.

Two of the five activities in red

The 0.2% decrease from January to February 2022 was accompanied by only two of the five activities investigated by the IBGE.

Information and communication services fell 1.2%, and other services fell 0.9%. Thus, they accumulated losses of 4.7% and 1.3%, respectively, in the first two months of 2022.

In the opposite direction, there were advances in transport (2%) and professional, administrative and complementary services (1.4%). Services provided to families had a slight positive change of 0.1%.

The first two registered the fourth positive result in a row. The latter showed stability after having interrupted, in January 2022 (-1%), a sequence of nine positive rates — a period in which it grew 59.8%.

With the arrival of the pandemic, in the first quarter of 2020, the provision of various services suffered a shock in the country.

At the time, the crash occurred because the segment brings together activities dependent on the circulation of customers, which plummeted after the adoption of restrictions to contain Covid-19.

Hotels, bars, restaurants and events are part of the list of impacted businesses.

What softened the initial losses and boosted the sector throughout the crisis was the advancement of technology-related services. These activities had a heated demand with social isolation measures.

In the second half of 2021, face-to-face services also started to bet on an improvement in business due to the advance of vaccination against Covid-19 and the reopening of the economy.

The recovery, however, has been threatened by the scenario of escalating inflation, higher interest rates and weakened income. Analysts underline that these factors, together, reduce the purchasing power of consumers.