Business confidence improves but is still at low level in historical terms

“The level of business confidence was still so low in May in historical terms that it is hard to avoid the conclusion that the rise was merely a bounce following the crash in March and April. Expectations have improved, signaling less worse months ahead,” said Aloisio Campelo Jr., FGV IBRE’s statistics superintendent.
经济学
02 六月 2020
Business confidence improves but is still at low level in historical terms

The Business Confidence Index (ICE), calculated by Fundação Getulio Vargas’ Brazilian Institute of Economics (FGV IBRE), rose 9.8 points in May, to 65.5 points, recovering 24.0% of the drop in March and April.

“The level of business confidence was still so low in May in historical terms that it is hard to avoid the conclusion that the rise was merely a bounce following the crash in March and April. Expectations have improved, signaling less worse months ahead. However, even if confidence continues to improve, it will remain low for some time, as the business environment is still far from returning to normal and there is persistently high economic uncertainty,” said Aloisio Campelo Jr., FGV IBRE’s statistics superintendent.

ICE consolidates confidence indexes in the four sectors covered by the business surveys carried out by FGV IBRE: Industry, Services, Commerce and Construction.

The index that measures the current business situation (ISA-E) increased 2.5 points in May, to 63.9 points, recovering 8% of the losses in March and April. The Expectations Index (IE-E) rose 11.5 points, to 63.0 points, recovering 23% of the losses in the same period. Despite their month-over-month increases, both indexes recorded their second lowest ever results in May.

The Predicted Demand Indicator (covering three months) went up 17.0 points, to 53.8 points, while the Predicted Employment Indicator (also covering three months) rose 6.4 points, to 57.7 points. The Business Situation Expectations Indicator – the only component of IE-E that looks at a six-month time horizon – increased 7.7 points, to 66.3 points, similar to the level of the ISA-Business Indicator.

Confidence in all sectors covered by ICE grew in May. These results were influenced by revised expectations, pointing toward improvement in relation to the current situation, except in the construction sector, in which ISA fell even further in May. In terms of quarterly moving averages, confidence in all sectors continued to decline.

In May, confidence improved in 38 of the 49 segments that make up ICE, after deteriorating in all segments in April.

The complete study is available here.