Business confidence regains 61% of March-April losses

Confidence improved in all four of ICE’s broad sectors, with significant rises in expectations indexes and growth in current situation perception indexes, except in the construction sector, in which ISA-Construction remained practically the same
Economics
06 July 2020
Business confidence regains 61% of March-April losses

The Business Confidence Index (ICE), an indicator calculated by Fundação Getulio Vargas’ Brazilian Institute of Economics (FGV IBRE), rose 14.9 points in June, to 80.4 points, after increasing 9.8 points the previous month. In May and June, the index recovered 61% of its March and April losses, but it remains at a historically low level.

“The timid evolution of current situation indicators in June suggests that the economic situation remained very weak then, especially in the services sector, whose Current Situation Index is still much closer to its all-time low than to its pre-pandemic level. Despite high levels of uncertainty, the perception that the worst moment may have passed is beginning to gain strength in the business community. As a result, expectations have become less pessimistic, and the signs point to a slow recovery in the level of economic activity,” said Aloisio Campelo Jr., FGV IBRE’s statistics superintendent.

The Business Confidence Index (ICE) consolidates confidence index figures in the four broad sectors covered by FGV IBRE’s business surveys: Industry, Services, Commerce and Construction.

After hitting all-time lows in April, business people’s confidence improved, driven by better expectations. The Expectations Index (IE-E) rose 19.4 points, to 82.4 points, recovering 60% of its March and April losses. The index that gauges the current business situation (ISA-E) went up 8.7 points, to 72.6 points, regaining 36% of its losses in the same period.

The Predicted Demand Indicator (which looks three months ahead) rose 27.4 points, to 81.2 points, while the Predicted Employment Indicator (which also looks three months ahead) went up 16.8 points, to 74.5 points. The Business Situation Expectations Indicator – the only component of IE-E that looks six months into the future – increased 13.7 points, to 80.0 points.

Confidence improved in all four of ICE’s broad sectors, with significant rises in expectations indexes and growth in current situation perception indexes, except in the construction sector, in which ISA-Construction remained practically the same. In terms of the average results in moving three-month periods, confidence continued to decline in all sectors.

Confidence decreased in all 49 of ICE’s component segments in April, and then increased in 78% of them in May and in all of them in June.

The complete study is available here.