Brazil: Services index grows 0.5 % in August

Services sector kept its recovery in August, growing 0.5 %, albeit in a slower pace compared to July (+1.08 %). The strongest growth came from the Services provided to families (+4.13%), as vaccination accelerated and Covid-19 infections falls, families opted to increase the consumption of this type of services. Professional, Administrative and Complementary Services contracted in August, generated by a reduction on technical and profissional services (-4.6%), this might indicate that companies in general are requiring less professional services, a bad signal for the whole economy. Information and Communication Services (+1.23%), Transport (+1.06%) kept it's growth, as expected.

Compared to it's pre-pandemic levels the services index is 4 % higher, however, not all the sectors of the index have completed the recovery from the pandemic. Transport and Information sectors, the biggest from the index, lead the services recoveries, with Transport 8.1 % higher than its pre-pandemic levels and Information and Communication Services 7 % higher. Falling behind are service in need of higher human contact, Services Provided to Families are 17 % below its pre-pandemic level and Professional and Administrative services are 5 % below.

As the economy walks towards the "new-normal", human contact services might still warrants positives rates of growth for the services sector, however, we believe that families services will not recover its full capacity until the end of the year, as inflation picked up to 10,9 % and salaries kept stagnated. Moreover, we are yet to see how the "new normal" will transform the services sector. It is quite possible that the demand for certain type of services might change permanently, changing the dynamics of this sector.