Brazil Services Confidence falls back in April
The Services Confidence Index (ICS) for Brazil, calculated by the Brazilian Institute of Economics (FGV IBRE), dropped 0.2 points in April 2018, down to 91.2 points. After the second consecutive drop, the quarterly moving average indicator of the ICS fell for the first time since August last year, also by 0.2 points.
“The recent drop in April’s ICS – smaller than in March – reflects an adjustment in business expectations, likely related to the uncertainty surrounding the political scenario. Prospects regarding the business environment’s evolution over the next six months negatively affected the month’s result. In the current context of gradual economic recovery, the electoral process may be contributing to the increased volatility of expectations”, said IBRE consultant Silvio Sales.
Confidence levels fell across nine of the 13 primary activities surveyed in April. The negative performance was determined by the 0.8 point drop in the Expectations Index (IE), influenced entirely by the Business Trend indicator, which fell 4.5 points. The Current Situation Index (ISA-S) rose 0.4 point in April, up to 87.2 points, driven by the indicator that measures satisfaction with the current demand volume, which advanced 1.5 point in the month, up to 86.0 points. The service sector’s NUCI fell 0.2 percentage point (p.p.) in April, down to 82.6%.
Every month, a question of the Survey seeks to identify the factors limiting the improvement of the business environment. In this question, a space is reserved for companies to describe factors they consider important and that are not listed among the questionnaire’s possible answers.
In April, worsened expectations of companies in the service sector were accompanied by an increase in negative observations about the political climate, which followed a downward trend until March, returning to the level of last November. It is important to note that the participation of other factors holding back business activities remained stable over the last seven months, at around 25% of the total responses to the question about restrictive factors to the business environment.
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