Brazilian Business confidence remains stable in August

The Business Confidence Index (ICE), calculated by FGV’s Brazilian Institute of Economics (IBRE), remained virtually stable in August at 91.6 points, varying only 0.1 points. In quarterly moving averages, the index dropped for the fifth month in a row (0.4 points). “Between July and August, business confidence recovered just one of four points lost in the previous quarter. By remaining stationary at a low level, these indicators suggest that the economy continues to grow at a very slow pace, causing dismay in the business environment and affecting expectations. Considering the scenario of domestic and foreign uncertainties, it is hard to imagine that confidence could increase consistently by the end of October, when the election period ends”, said Aloisio Campelo Jr., Superintendent of Public Statistics at IBRE. The Business Confidence Index (ICE) consolidates confidence indexes across four sectors covered by the IBRE’s Business Surveys: Industry, Services, Trade and Construction. The Current Situation index (ISA) fell 0.3 points in August, reaching 89.6 points and revealing a worse perception of the current economic scenario by entrepreneurs. The Expectations Index (IE), which had dropped for two months in a row, rose 0.5 point, reaching 98.1 points. In both cases, it is clear that the confidence upward trend that had been seen since early 2017 has lost steam during the first half of the year. Among the sectoral sub-indexes, the Construction Confidence Index (ICST) had the largest drop (1.6 points) in the month and still had the worst result among the four sectors. The 1.5-point increase in the Services Confidence Index (ICS) was the main driver behind such increase in the aggregate index. The Trade Confidence Index (ICOM) rose 1.1 points, while the Industry index dropped 0.4 points. Only 51% of the 49 sectors covered by ICE showed high confidence in July. Based on quarterly moving averages, the ratio of segments on the rise increased for the second month in a row, to 47% of the total. The August 2018 edition of the index surveyed 4,964 companies between August 1 and 24. The next ICE will be released on October 1. The complete study is available on the website.