The Business Confidence Index (ICE), from the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre/FGV), dropped 0.3 point in July, going to 98.5 points, after four consecutive highs. On quarterly moving averages, the indicator maintains the upward trend.
In the assessment of the Superintendent of Statistics at Ibre/FGV, Aloisio Campelo Jr., the ICE drop in July is “too mild” to signal a change in the uptrend that began in March. According to him, while the pace of current activity seems unchanged in the month, the worsening of expectations in the questions that target the following six months suggests companies’ concern with a possible slowdown in the last quarter of the year.
“Among the factors that may be influencing this caution are domestic monetary tightening, the prospects of a slowdown in the world economy and low consumer confidence. In the opposite direction to the average, the service sector continues to show strength and reaches the highest level of confidence of the four major segments surveyed, something that has not occurred since May 2012,” he said in a note.
Causes
According to the survey, the slight drop in business confidence was determined by the worsening of expectations in relation to the following months. The Present Business Situation Index (ISA-E) rose 0.3 point to 100.3 points, the highest level since August 2021 (100.5 points). The Expectations Index (EI-E) dropped 2.1 points, to 97.6 points, the lowest level since April this year (94.4 points).
The Business Confidence Index (ICE) consolidates the confidence indices of the four sectors covered by the Business Surveys produced by Ibre/FGV: industry, services, commerce and construction.
According to the survey, in July, confidence dropped in all sectors that make up the ICE, except in the services segment, which maintained its good phase with a 2-point increase in confidence.
“In Manufacturing and Construction, the fall in confidence was influenced by a significant worsening of expectations, while in commerce, evaluations were less favorable in both temporal dimensions of the survey. With the sectoral results for July, this is the first time that [o setor de] services has registered the highest level of trust among the sectors since May 2012”, says Ibre/FGV.
