Confidence in the services sector falls to 94.8 and drops 1 point in April

In the opinion of economist Hugo Garbe, this result reflects a series of worrying factors in the services sector.

“This decrease in confidence is the result of both the worsening assessments of current conditions, as shown in the Current Situation Index, and the decline in future expectations, evidenced by the Expectations Index. Specific indicators, such as the current volume of demand and the business situation, both showed retraction, suggesting a perception of weakening in the sector’s performance”, he analyzes.

According to the expert, despite the macroeconomic scenario showing some positive signs, such as the drop in interest rates and control of inflation, the services sector does not show expectations of a strong recovery in the first half of the year.

“This heterogeneity in expectations across segments suggests that while some areas may see improvement, others continue to struggle with persistent challenges,” he highlights.

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According to a survey by FGV, the business trend indicator for the next six months had the biggest impact on the decline, with a drop of 2.5 points, and reached 94.5 points, while the expected demand indicator for the next three months dropped 0. 4 points, for 94.5 points.

FVG economist Carla Beni explains that there are other factors that must be taken into consideration, such as debt renegotiation programs. She notes that the services sector is very heterogeneous and negative results can and do appear eventually.

“Many people today are looking for programs to renegotiate their debts. By renegotiating your debts, this reduces your own consumption and also reduces your use of services. So this could also be one of the factors that ended up reducing the use of services a little in this first quarter”, he observes.

Expectations for the coming months

According to Carla Beni, the next few months also project a certain downturn, but the recently launched microcredit package aims to inject an important volume of resources for debt renegotiations of small and medium-sized companies.

“This will provide new dynamism in the economy so that by the end of the year you can reuse services again. And these companies, by renegotiating their debts and improving their activities, will also be able to resume using services.

For economist Hugo Garbe, the projection is uncertain considering the coming months,

“Continued negative assessments of the current situation and future expectations could support a negative scenario, with a more depressed business environment. Although the macroeconomic panorama may offer some support, the recovery of the sector’s confidence seems to depend on a more uniform and broad improvement in all segments of the services sector”, he assesses.

The assessment of the current moment also helped to reduce confidence, with the Current Situation Index (ISA-S), an indicator of the perception of the current situation in the services sector, falling 0.5 points, to 95.4 points, the lowest level since May 2023 (92.3 points).