Brazil services sector grows 2.6pc in Nov, sixth rise in a row

BRASILIA: Services activity in Brazil rose for a sixth consecutive month in November, more than twice as fast as analysts had expected and suggesting Latin America's largest economy went into the year-end on a strong footing.

The sector expanded by a seasonally adjusted 2.6% on the month, government statistics agency IBGE said on Wednesday, more than twice the median 1.2% rate of growth economists in a Reuters poll had forecast.

All five sub-sectors surveyed grew in November. But as IBGE survey manager Rodrigo Lobo noted, some key areas remain under pressure due to the pandemic.

"Activities such as restaurants, hotels, family services and transport ... are recovering, but the need for social distancing means the sector has not yet returned to pre-pandemic (levels)," he said.

Services-sector output in November was down 4.8% from a year earlier, IBGE said, less than the 6.2% decline forecast in the Reuters poll and the smallest year-on-year decline since April.

Services output was down 8.3% in the first 11 months of the year, and down 7.4% over the 12 months through November, compared with the same periods a year before, IBGE said.

Activity is picking up from the historical trough in May, rising an accumulated 19.2% in the six months since then, IBGE said. But activity is still down 3.2% from the pre-pandemic peak in February, and as the IBGE chart below shows, down 14.1% from the series high in November 2014.

Services account for around two-thirds of Brazilian economic activity. For months last year, the sector lagged industry and manufacturing in rebounding from the crisis lows due to the effects of social distancing to stop the spread of COVID-19.

But recent data show it is coming back to life, accounting for over 40% of the record net 809,000 new formal jobs created in the economy over October and November, according to economy ministry figures.