Brazilian services sector outperforms expectations

services outperforms expectations
Transportation services were the best-performing in June. Photo: Shutterstock

The services sector, the backbone of the Brazilian economy, grew 0.7 percent in June compared to May. It was the second consecutive month of growth after a small skid in April. 

The results were slightly better than markets expected. In H1 2022, services were up by 8.8 percent year on year. But 12-month growth has decelerated since March.

Services to families increased by 0.6 percent, the fourth consecutive positive result for  a segment that was badly hit by Covid restrictions in recent years. It remains 6.1 percent below February 2020 levels.

“Although it is still the only sector below pre-pandemic levels, it has been showing a trajectory of growth and is getting closer and closer to recovery,” said Luiz Almeida, a research manager at the Brazilian Institute of Geography and Statistics.

Markets expect growth to continue as fuel inflation cools off, alleviating families’ budgets in the short term.

Nevertheless, the cost of services has accelerated since the start of the year, up by 8.87 percent in 12 months.