Business confidence dropped 2.5 points in January and reached 91.6 points, on a scale that goes from 0 to 200. Results above 100 indicate confidence. The result is the lowest level since April 2021, when the Business Confidence Index (ICE) reached 89.6 points.
According to data released today (1st) by the Brazilian Institute of Economics of Fundação Getulio Vargas (Ibre/FGV), in the quarterly moving average metric, the indicator fell for the fourth consecutive time, now by 3 points. The ICE consolidates the confidence indices of the four sectors covered by the Business Surveys produced by FGV IBRE: industry, services, commerce and construction.
The indicator also showed a significant worsening, in January, in the assessments of the current situation and in the expectations for the coming months. The Present Business Situation Index (ISA-E) registered a drop of 4.5 points, going to 91.3 points. This is the lowest level since April 2021, when it reached 87.8 points.
The Expectations Index (IE-E) dropped 3 points, reaching 91.4 points. The result is the lowest since March 2021, when it reached 85.2 points.
With these results, the two indices recorded declines for the third consecutive time, in addition to accumulating a loss of more than 8 points in this period and moving away from the neutrality level of 100 points.
According to Ibre Statistics Superintendent Aloisio Campelo Jr, ICE has accumulated losses of 10.9 points since September 2021, in a downward movement that began with the industry and gradually spread to all segments.
“Confidence in the service sector, which was more resilient until the end of the year, was the one that fell the most in January, under the influence of the worsening pandemic situation with the arrival of the Ômicron variant in Brazil. In this segment, there is a more expressive drop in the indices that measure the perception of companies regarding the current situation compared to the indices that measure expectations, a typical trend of the shocks caused by the waves of covid-19”, he observed.
Campelo Jr added that the concerns with this movement are the level of jobs and the economic recovery, which had been registered.
“This result is worrying as the segments most dependent on on-site consumption employ a lot and were only now managing to return to confidence levels comparable to those of the pre-pandemic period”, he said.
The decline in confidence in all sectors surveyed in January deepened the trend observed in previous months. Ibre assesses that this movement was influenced by the worsening of the health situation with the increase in the number of cases of Ômicron.
The sharpest declines were registered in the confidence of services (-4.3 points) and construction (-3.9 points), followed by industry (-1.7 points) and commerce (-0.4 points). Even with the slight drop at the margin, the Trade Confidence Index (Icom) is 15 points below the neutral level of 100 points.
Diffusion
The January result also showed that business confidence rose in 11 of the 49 ICE segments. This means a retreat in the spread compared to the 21 segments of the previous month. “The highlight of the month is the Construction sector, whose confidence fell in all 11 segments,” added Ibre.
