In Nov'22 no major economic sector grew and the weakening of the general level of activity that marked the second half of last year continued. Not even retail, with November's promotions and their potential boosting effect on sales, escaped the rule. Services may also be beginning an inflection from their positive phase.

From Oct'22 to Nov'22, real retail sales, considered in its broad concept—which includes the branches of vehicles, auto parts and construction material—fell 0.6% (seasonally adjusted). Physical industrial output changed -0.1% and services turnover was flat at 0%.

As a result, the Central Bank's IBC-Br indicator registered another contraction in the country's level of economic activity: -0.5%, free of seasonal effects. This was the fourth consecutive negative rate, with increasing intensity since Sep'22 (-0.1%).

According to the latest IBGE data available, the services sector, which had so far been stimulating economic activity, lost strength in the final quarter of 2022. After contracting 0.5% in Oct'22, it stagnated in Nov'22, with three of its branches in the red and two very close to stability.

The worst results in the transition from Oct'22 to Nov'22, after discounting the seasonal effects, were recorded by other services (-2.2%)—a branch that groups together a diverse set of activities, such as financial, real estate, urban and rural services and services provided to households (-0.8%), which until recently had been doing well—and information and communication services (-0.7%).

In retail, a decline in sales marked most of the sector, with 6 of the 10 branches identified by the IBGE in the red. The largest falls in Nov'22 were due to fuels and lubricants (-5.4%), computer, communication and office supplies and equipment, (-3.4%) and books, newspapers, magazines and stationery (-2.7%).

It was the first drop of retail after changes in fuel taxation helped reduce its prices, stimulating sales between Aug'22 and Oct'22 and freeing income for the purchase of other goods and services. In Nov'22, in contrast, there was a rise in the price of fuels, driven by ethanol and gasoline.

The industry, although once more operating in low gear, at least had a mitigating factor: unlike retail trade and services, most of its branches and regional parks managed to avoid negative ground.

Of the 26 industrial branches identified by the IBGE, 11 contracted in the series with seasonal adjustment, which certainly amounts to a relevant share but is still a minority of the total (42%). As for the macro-sectors, three made some progress and only one remained in the red (durable consumer goods).

Among the 15 regional industrial parks, 6 lost output in Nov'22, which represents 40% of the total, with emphasis on the North, Northeast and South of the country. São Paulo's industry and most of the parks in the Southeast were in the black.

In the year to November, however, the pattern is clear: services in the front, supported by pandemic control and pent-up demand from higher income segments of the population, and retail trade and industry in the red, mainly due to durable goods, whose markets tend to be more harmed by the scenario of rising interest rates in the country.

In Jan–Nov'22, while services increased 8.5% compared to the same period of the previous year, the industry and broad retail both fell 0.6%, despite some cushioning in recent months, thanks to the lower comparison bases at the end of 2021.

In relation to the pre-pandemic period, only services remain at a higher turnover level (10.7% above Feb'20). The industry (-2.2%) and broad retail (-1.6%) have already succumbed to lower levels and this is not news.

The full text is available in Portuguese.