Letter IEDI n. 1148—Poor evolution
In Apr'22, little progress was made in the country's level of economic activity, limited by the virtual stagnation of both the industry and services. Retail did manage to do better, but did not escape some slowdown, with sales far from a robust result. After the positive initial impact of the return of face-to-face activities and business reopening, economic growth decelerated due to unemployment and inflation, which compromise the purchasing power of the population.
From Mar'22 to Apr'22, the industry recorded a variation of only +0.1%, after discounting seasonal effects, intensifying the slowdown of the previous months (+0.7% and +0.6% in Feb'22 and Mar'22). Services were not far from this, with +0.2% in the same comparison, well below the previous figure (+1.4% in Mar'22).
With a slightly greater dynamism, narrow retail trade grew +0.9%, that is, less than in the preceding months (+1.4% in Feb'22 and Mar'22). In its broad concept, which includes sales of vehicles, auto parts and construction material, performance in April was even weaker: +0.7%, after being almost flat in the previous month (+0.1%).
The weak evolution of the industry was due to a rather symmetrical distribution of positive and negative figures across its macro-sectors and the different regional parks. The decline in capital goods (-9.2%), as well as in durable consumer goods (-5.5%), was accentuated, while semi-durable and non-durable consumer goods (+2.3%) and intermediate goods (+0.8%) increased production.
Regionally, 7 of the 15 locations monitored by the IBGE registered a drop from Mar'22 to Apr'22, including São Paulo (-2.8%, with seasonal adjustment), 7 expanded their output and 1 regional park, the industry of Amazonas (+0.1%), followed the total for Brazil and was practically flat.
In services, three of the five segments registered a loss of revenue and the other two grew but at a slower pace than previously. In the worst positions were the segment of other services (-1.6%), which includes a diverse set of activities such as financial, urban and agricultural services, and the transport segment (-1.7%).
On the positive side, the most intense increase was seen in services provided to households (+1.9%), thanks to housing and food (+3.9%), where there is still some pent-up demand due to the pandemic. It is worth remembering that this is the only branch of services still very far from the pre-pandemic level (-9.6% compared to Feb'20).
In retail trade, despite recent growth for the sector as a whole, falls prevailed among its different segments. Of the 10 branches monitored by the IBGE, 6 were in the red, including some of the most important ones such as vehicles and auto parts (-0.2%) and supermarkets, food, beverages and tobacco (-1.1%).
Among those on the black, only two branches actually saw sales increase: fabrics, clothing and footwear (+1.7%) and furniture and household appliances (+2.3%). The continuity of this movement, however, is yet to be proven, since, to a greater or lesser extent, the market for both depends on consumer credit, which tends to be impaired by the recent interest rate increases in the country.