Commerce drops 3.9% in October and retail has a slow recovery, Santander indicator shows

Retail trade fell 3.9% in October compared to the same period in 2020, shows the IGet indicator, prepared by Santander in partnership with Getnet. In relation to the immediately previous month, however, there was an increase of 1.9% after two negative results, in September and August.

“October’s high does not prevent a three-month accumulated contraction. We expect a modest retail performance for the rest of the year, reflecting the normalization of household consumption patterns, shifting spending towards services as mobility returns to ‘ normality'”, highlighted the research.

In the annual comparison, only automotive parts, pharmaceutical items and others rose by 15.2%, 2.5% and 10.1%, respectively. Books had the biggest fall, with 32.3%, furniture and electronics retracted 23.3% and apparel, 11.1%. Supermarkets retreated 5.8%, and office supplies, 5.9%.

Compared to October 2020, construction material fell by 6.3%.

“Until the rest of the year, [o setor de] services must pull the resumption. The household consumption basket changed, with an increase in spending on services, which was already expected because with the restriction of mobility the segment dropped a lot. In addition, we now have inflationary pressure and problems in the production chain, which also impact the consumption of goods”, explains Santander economist Lucas Maynard.

Services, however, continue to recover slowly. According to the indicator, the segment, one of the most impacted by the Covid-19 pandemic, grew 0.9% compared to the same period in 2020 and 2% compared to September, driven by accommodation and food.

Other services, which include leisure and tourism, for example, dropped 4.5% year-on-year and 2.9% monthly.

The sector is still 21.3% below the pre-pandemic level (February 2020) and 26.5% below the 2019 average. “Services should gradually return, but we see a sequential recovery with mobility close to normal”, says Maynard.

For the economist, segments such as leisure, tourism and cultural services have not yet fully recovered.

According to Maynard, the worsening financial conditions of the population are beginning to be reflected in the performance of sectors of the economy.

In recent weeks, analysts and financial institutions have revised downward expectations for GDP (Gross Domestic Product) growth in 2022. This week’s Focus bulletin, in which the Central Bank releases market forecasts, came for the first time with a forecast below 1%.

Economists consulted by BC expect growth of 0.93%. A week ago, the projection was 1%, and four weeks ago, 1.50%. Some analysis houses are already working with negative GDP for 2022.

Expectations worsened especially after the government’s move to circumvent the spending ceiling, a rule that limits the increase in public spending.

At the end of October, the Jair Bolsonaro government (no party) and allies in the National Congress inserted in the PEC (Proposal for Amendment to the Constitution) that postpones the payment of precatório — federal debts recognized by the courts — a change in the ceiling correction rule of spending.

In practice, the measure expands the limit on federal expenditures with the main objective of financing, in an election year, the government’s new social program, Auxílio Brasil, which replaces Bolsa Família —a brand of PT administration.

The movement was poorly received by the market, which started to forecast worse indicators for next year, also for inflation and for public accounts.

“We still don’t have a negative forecast [para o PIB] because we believe that factors such as the improvement in the job market, increased mobility and the recovery of services should remain in the next year”, says Maynard.

The indicator takes into account transactions made through Getnet’s machines in the country. In all, the retail indicator covers 150 thousand establishments and the services indicator 73 thousand.

The company has a 16% share in the face-to-face payments market and 33% in ecommerce.