Monthy Survey of Services

Services grow 2.6% in July, but losses related to pandemic are yet to be offset

Section: Economic Statistics | Carmen Nery

September 11, 2020 09h00 AM | Last Updated: September 11, 2020 10h17 AM

Growth in information technology is driven by the activitiy of websites, providers and search engines - Photo: Pixabay

The services sector increased 2.6% from June to July, the second positive rate in a row, accumulating a gain of 7.9% in the months of June and July. The result occurs after a sequence of four negative rates (between February and May), a period in which it accumulated a loss of 19.8%. In comparison with July 2019, the volume of services decreased by 11.9%, the fifth consecutive negative rate. In the first seven months of 2020, there was a decrease of 8.9%. In twelve months, the volume of services fell 4.5%. The data are from the Monthly Survey of Service (PMS), released today (11) by the IBGE.

“The 2.6% advance was not enough to eliminate the losses observed between February and May. It is worth mentioning that the effect of the pandemic itself occurred between March and May. The negative result in February was not yet due to social isolation, but rather an accommodation in the service sector in view of the advance of the end of 2019. The losses of the pandemic between March and May add up to 19.8% ”, explains survey manager Rodrigo Lobo.

He clarifies that, unlike industry and commerce that have been showing a faster recovery, the service sector, due to either its heterogeneity or the 70% weight it represents in the economy  (in the case of the activities investigated in the survey _ about 30% of GDP) has shown a slower recovery, especially in activities involving face-to-face service.

Information and communication boosts in the pandemic

The expansion of the volume of services was observed in four of the five activities analyzed, with a highlight to the advances in information and communication services (2.2%) and transportation, support services for transportation and mailing (2.3%). The first accumulates a gain of 6.3% in the last two months, but still not offsetting the losses of 9.2% observed in the first five months of the year. Transportation, support services for transportation and mailing increased 14.4% between May and July after decreasing 25.2% in the March-April period.

The other advances came from professional, administrative and complementary services (2.0%), accumulating a gain of 4.0% in the last two months after decreasing 17.4% between February and May; and other services (3.0%), which recovered part of the cumulative loss between March and May (-11.8%) by advancing 10.5% in June-July 2020. The only negative result in July 2020 was in services rendered to families (-3.9%), after growing 12.2% between May and June.

“The information technology sector is the most dynamic and resilient among service activities; even in times of crisis, such as the truckers' strike, the 2016/2017 and 2008 crises, the sector has shown the ability to recover very quickly. In relation to the pandemic, it does not belong to the most affected sectors as those that depend on face-to-face service, such as the services rendered to families by hotels and restaurants. The growth of the sector was driven by the activities of websites, content providers and Internet search engines, which have advertising revenues; and also by videoconferencing applications and platforms, which had an additional gain during the pandemic ”, analyzes Mr. Lobo.

In the 2.3% increase in the activity of transportation,  support services for transportation and mailing, the highlight is road freight transportation, due to logistics demands. "Whether to serve the industrial or trade sectors with the transportation of goods or agribusiness, with the transportation of grains, road transportation is the main means of moving products across the country," adds the survey manager.

In comparison with July 2019, the drop of 11.9% in July 2020 was due to the retraction in four of the five activities and also had growth in just over a quarter (28.3%) of the 166 types of investigated services. The major negative influences were on services rendered to families (-54.9%), transportation, support  services for transportation and mailing (-11.3%) and professional, administrative and complementary services (-14.6%).

High reaches 20 of the 27 Federation Units, especially São Paulo and Rio de Janeiro

Most (20) of the 27 Federation Units presented an expansion in the volume of services in July 2020, in comparison with June, following the advance (2.6%) in the total volume in Brazil (seasonally adjusted series). São Paulo (1.6%) and Rio de Janeiro (3.3%) registered the main advances. Other relevant positive contributions came from Rio Grande do Sul (3.5%) and the Federal District (5.2%). Ceará (-2.5%) and Bahia (-0.9%) registered the main negative impacts in regional terms.

In the annual comparison, the drop of -11.9% was spread in decreases in 25 of the 27 Federation Units. The main negative influence came from São Paulo (-10.7%), followed by Rio de Janeiro (-9.2%), Minas Gerais (-11.8%), Paraná (-15.4%), Bahia ( -26.4%) and Rio Grande do Sul (-14.4%). The only positive contributions came from Mato Grosso (0.8%) and Rondônia (5.2%), driven by the good performance of activities related to agribusiness in Mato Grosso, and the management of ports and terminals and waterway and road transportation of cargo in Rondônia.

“As São Paulo and Rio de Janeiro are the two states with the highest percentage of participation in the service sector as a whole - São Paulo, representing 43% of the country's services and Rio de Janeiro, with 15% -, they end up influencing the data for Brazil either positively or negatively ”, concludes Mr. Lobo.