Services sector grows despite loss in purchasing power

Transportation services rose by 2.7 percent. Photo: Marcelo Camargo/ABr

Brazil’s services sector, seen as a bellwether for the country’s economic activity, posted 1.7-percent growth in March, beating market expectations of 0.8-percent. This was the third consecutive month of rising figures, despite timid improvements in employment and rampant inflation.

The services sector is at its highest level since 2015 and is 7.2 percent above pre-pandemic levels. The first quarter of this year saw an accumulated 9.4 percent growth.

According to Brazil’s official statistics agency IBGE, transportation (+2.7 percent) was the main driver of growth. “That was especially the case for cargo transportation for e-commerce and agribusiness,” said IBGE’s Rodrigo Lobo, the survey’s manager. “Demand for this type of service has soared since the first coronavirus peaks.”

Transportation costs soared in April and rose by almost 2 percent due to recent hikes in fuel prices. Only food products saw a bigger price increase last month.