FGV’s Brazilian Institute of Economics (IBRE) will launch the Business Confidence Index (ICE), at 8 a.m. on Wednesday, May 31. The index gathers data from the Transformation, Services, Commerce, and Construction industries in Brazil. These four sectors together account for approximately 66.6% of the country’s economy. The ICE and the Current Business Situation (ISA-E) and Business Expectations (IE-E) sub-indexes will be released at the end of each month.

According to IBRE’s Superintendent of Public Statistics, Aloisio Campelo, the new index’s coverage of different sectors makes it more consistent with Gross Domestic Product (GDP) results.  “From a business standpoint, we can say that it is the segment that most broadly follows the Brazilian economy, with indicators that efficiently portray the current status and expectations of economic agents,” he said.

To calculate the new Business Confidence indicators, IBRE will take into account the Added Value (AV) of each sector, reviewed on an annual basis in January by the Brazilian Institute of Geography and Statistics (IBGE). The AV is equivalent to these sectors’ share in the economy, where the Services segment is the most important, accounting for 34.5% in 2017. Industry ranks second this year (29.8%), followed by Commerce (28.1%) and Construction (7.6%).

The market’s primary reference to predict economic activity is currently the Industry Confidence Index (ICI). With the advent of the ICE, the IBRE hopes to have an even more robust figure to gauge the GDP.

“The industry really has a cyclical feature, which gives an idea of what is going on with the economy. But with more aggregate information, the idea is to help look at the trends as a whole”, said Campelo.

Special items

IBRE will also disclose special items common to the sectors that make up the Business Survey, as well as the relative frequencies of responses observed in the survey. Users of FGV Confidence, a paid service for the market, will also have access to additional data: current demand volume, current business situation, expected demand and jobs, and business trends.

The index will be available as of May 31, on IBRE's website.