Business Confidence drops in Brazil in June
The Business Confidence Index (ICE), calculated by FGV’s Brazilian Institute of Economics (FGV IBRE), dropped 1.9 points in June, down to 90.5 points. The 2018 second-quarter average also fell 1.9 points compared to the previous quarter.
“The drop in business confidence seen in June confirms the trend indicated in the last two months. Part of the increased discouragement this month is related to economic and political developments resulting from the truck drivers’ strike in late May. This seemingly temporary effect was compounded by other factors that had been driving confidence down: dissatisfaction with the sluggish economy, lack of confidence in economic policy, and greater political and electoral uncertainty”, said Aloisio Campelo Jr., Superintendent of Public Statistics of the IBRE.
The Business Confidence Index (ICE) consolidates confidence indexes across four sectors covered by FGV IBRE’s Business Surveys: Industry, Services, Trade and Construction.
The ICE’s drop in June is linked to both the worsening corporate perception surrounding the current scenario and short-term prospects. The Current Situation sub-index (ISA-E) dropped 1.1 points, down to 88.6 points. The Expectations Index (IE-E) fell -0.9 point, marking the third consecutive drop, down to 97.5 points – the lowest level since January 2018 (96.8 points).
Confidence indexes dropped across all sectors in June, particularly in Trade and Construction, which dropped 3.0 and 3.1 points, respectively. The main drivers behind this trend were the Trade and Services sectors, respectively accounting for 32% and 42% of the overall drop in the index.
Only 27% of the 49 sectors within ICE showed high confidence in June. Based on quarterly moving averages, the ratio of segments on the rise also fell compared to the previous month, representing 36% of the total.
The May 2018 edition of the index surveyed 5,549 companies between June 04 and 26.
The next ICE will be released on July 31, 2018. Go to the website to read the complete study.