Trade confidence retreats in May 2019
The Trade Confidence Index (ICOM) of Fundação Getulio Vargas’ Brazilian Institute of Economics (IBRE) fell by 5.4 points in May, rising from 96.8 to 91.4 points, returning to the same level as in September 2018. In quarterly moving averages, the indicator fell by 2.9 points, the third consecutive drop.
“The new sharp drop in trade confidence suggests that business owners are still struggling with the pace of sales in the second quarter. The current situation indicators reflect the poor performance of the activity in early 2019. Simultaneously, entrepreneurs continue to review their expectations, the result of the frustration with the scenario presented thus far. The return to confidence recovery still depends on the reduction of uncertainty levels, the more positive figures in the labor market, and the return of consumer confidence,” said Rodolpho Tobler, Coordinator of the FGV IBRE.
In May, the confidence rate fell in 11 of the 13 segments. The index fell due to both a further reduction in expectations and the worsening of the indicators on the present moment. The Expectations Index (IE-COM) returned to values below 100 points (94.8 points in May), falling by 6.6 points, the worse results since September 2018 (93.2 points). The Current Situation Index (ISA-COM) fell by 4.0 points, reaching 88.3 points, the lowest since January last year.
Each month, a survey seeks to identify factors that are limiting the improvement of the business environment. In this regard, space is reserved for companies to describe factors that they consider important and that are not listed among the response options offered in the questionnaire. These open responses were divided into three main topics: political factors, economic factors, and others.
The result suggests that the political factors continue to contribute to limiting the improvement of the sector’s business environment, as well as the caution adopted by the companies in the planning of the next months. The percentage of companies citing political factors as a limitation was 6.7% the highest since last October, when it reported 9.4%.
The May 2019 edition collected information from 843 companies between the 1st and 22nd of this month.
The next announcement of the Trade Survey will take place on June 26, 2019.
The full study is available on the website.