Faltering services sector confirms Brazil’s Q3 economic slowdown

Rising airfare costs kept Brazilian from traveling. Photo: Stefan Lambauer/Shutterstock

The Brazilian economy is showing clear signs of slowing, and new data on the services sector confirms the trend.

According to the Brazilian Institute of Geography and Statistics (IBGE), the sector contracted by 0.3 percent from the previous month — when it was already shrinking. In the 12 months through September, the sector grew 4.4 percent, down from the 5.3 percent growth posted through August.

IBGE analyst Rodrigo Lobo says September was the month with the third-lowest revenue output this year, behind January and April. Mr. Lobo says there was “nothing special” behind the decline. The sector also contracted in 17 of the country’s 27 states, showing a widespread slowdown.

The service sector accounts for half of Brazil’s formal jobs and about 70 percent of the country’s gross domestic product. When it falters, the entire economy feels the pinch. But signs that the economy is losing steam are everywhere.

Industrial output has been flat for the past 12 months. Retail sales are trending down. And the Central Bank’s monthly index of economic activity — which monitors the country’s primary...

Fabiane Ziolla Menezes and Gustavo Ribeiro

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.