The Business Confidence Index, calculated by Fundação Getulio Vargas’ Brazilian Institute of Economics (FGV IBRE), rose 7.0 points in August, to 94.5 points. It has now recovered 96% of its losses in March and April.

“Business confidence improved significantly in August, following the recovery trend that started in May, influenced by executives’ better perceptions of the current business situation. In sector terms, the highlights are industry and commerce, whose confidence levels are now close to where they were before the novel coronavirus pandemic. In construction and especially in services, the resumption of optimism is similar to that of other sectors, but perceptions of the current situation remain very unfavorable, and this has curbed a more significant increase in confidence,” says Aloisio Campelo Jr., FGV IBRE’s statistics superintendent.

The Business Confidence Index combines confidence indexes in the four broad sectors covered by FGV IBRE’s business surveys: industry, services, commerce and construction.

After hitting an all-time low in April, business confidence began to recover gradually, based on expectations. As of July, the improvement in confidence started to be driven by both expectations and perceptions of the current situation. In August, for the first time since the health crisis began, the Business Confidence Index was mainly lifted by improvements in business people’s perceptions of the present moment. The Current Situation Index

increased 8.9 points, to 88.6 points, while the Expectations Index went up 6.3 points, to 96.1 points.

On the expectations side, the Predicted Demand and Predicted Employment components (which look three months ahead) and the Business Trends Indicator (which looks six months ahead) rose 5.5, 6.3 and 8.2 points, respectively, in August, recovering 91%, 89% and 79% of their losses in March and April.

In August, the commerce sector’s confidence increased sharply, influenced by improved perceptions of the current situation, after going up less than other sectors last month. In the other sectors, confidence maintained its upward trend, motivated by both the improvement in expectations and perceptions of the current situation. Despite this improvement, the Current Situation Index for the services sector remains below 80 points and at the lowest level among the sectors that make up the Business Confidence Index.

Diffusion of confidence

In August, confidence improved in 92% of the Business Confidence Index’s 49 component segments, up from 90% the previous month. Confidence increased in industry and services, stayed the same in construction, and improved in 100% of commerce’s segments.

The complete study is available here.