Brazil services activity starts 2020 with surprisingly strong growth

BRASILIA: Services activity in Brazil kicked off the year with a surprisingly strong rise in January, official figures showed on Tuesday, a counter to the increasing raft of indicators that suggest Latin America's largest economy is losing steam.

The services sector grew by a seasonally adjusted 0.6% on the month, government statistics agency IBGE said, three times as much as the median estimate of 0.2% expansion in a Reuters poll of economists.

December's fall of 0.2% was revised up to unchanged, IBGE said, meaning the sector has not contracted on a monthly basis since May last year.

Services sector output in January was down 4.7% from a year earlier, IBGE said, less than the 5.1% decline forecast in the Reuters poll, although that marked the tenth consecutive year-on-year decline.

The accumulated contraction of 8.3% over the 12 months to January was the biggest fall since the series began in 2012, and the sector is still 3.0% smaller than it was before the onset of the pandemic and social distancing measures just under a year ago, IBGE said.

Two of the five sub-sectors surveyed grew in January, IBGE said. They were transport and related services, which grew 3.1%, and professional, administration and other services, which rose 3.4%.

Services account for around two thirds of all activity in Brazil's economy. IBGE figures show that the sector has yet to recover the ground lost since the onset of the pandemic last February, and is 13.8% smaller than its peak in 2014.