Letter IEDI n. 1087—Growth with sectoral disparities
The level of economic activity in Apr'21 evolved positively, with the beginning of the easing of the restrictive measures that had been implemented to combat the second COVID-19 wave. Despite this, the progress was heterogeneous and not all sectors were able to advance in their recovery. For this reason, it turned out to be a weaker month than many expected.
The industry did not grow: -1.3% compared to Mar'21, with seasonal adjustment. As this is the third consecutive month of losses, we can say that the industrial recovery has been interrupted, at least for the time being. This is a factor of concern, as the industry establishes many intra and inter-sectoral relationships, having great capacity to spread its pace, whether positive or negative, to the rest of the economy.
Services, in turn, saw an increase in revenue (+0.7%), albeit a weak one, especially if we take into account the significant drop registered in Mar'21 (-3.1%). The sector is, thus, once more not too far from stability, as it was at the turn of the year. Without extensive vaccination and effective control of the pandemic, the reaction of services, which include many activities that require personal contact and mobility, tends to be limited. As a result, job recovery will also continue to be hampered, given that service activities are major employers.
Retail achieved a higher level of growth, with sales in its broad concept (which includes construction materials and vehicles) registering 3.8% compared to Mar'21, seasonally adjusted. In this case, however, it is not possible to say with certainty that this will be the beginning of a new expansion phase, since its trajectory has been marked by fluctuations in recent months.
As a result of these sectoral developments, the Central Bank's IBC-Br index, which works as a proxy for GDP, showed a variation of +0.44% from Mar'21 to Apr'21, after seasonal adjustment. Although positive, it is worth noting that it is the weakest rate since the recovery started after the first impacts of COVID-19 in Mar–Apr'20, and only partially offset the 1.61% decrease of the previous month. It would have been a better month if the industry had been on an upward path.
Heterogeneity has also contributed to hinder industrial dynamism. Most branches (70%) and regional parks (60%) followed by the IBGE were in the red. Among the four macro-sectors, intermediate goods (-0.8%, with adjustment) and semi- and non-durable consumer goods (-0.9%) had losses, while capital goods (+2.9%) and consumer durables (1.6%) increased production.
Regionally, Apr'21 followed the same pattern observed in previous months: a weakening in the industrial parks of the South and São Paulo, which had been leading the recovery, and a decline in the Northeast. What changed in relation to past results was the intensity with which many slammed on the brakes. The industry of São Paulo, which has been alternating highs and lows, registered -3.3%, and that of the Northeast region as a whole (in the red since Dec'20) contracted 7.8%.
In services, a strong disparity also marked the evolution of the different segments. In Apr'21, 3 of its 5 segments did not advance, but it is worth remembering that since Dec'20 not all of its branches are able to grow. Thus, the expansion was concentrated only in services provided to households (+9.3% after -28% in Mar'21), which responded intensely to the relaxation of restrictive measures, and information and communication services (+2.5%), favored by the pandemic situation.
Retail trade was the exception in Apr'21, not only due to the greater intensity of its growth, but also because the vast majority of its branches were in the black. The only negative result came from supermarkets, food, beverages and tobacco, with -1.7% after the elimination of seasonal effects, more directly impacted by inflation, unemployment and cuts in emergency aid.
Although Apr'21 was not a month of robust growth, as it left many activities behind, it contributed to a favorable revision of economic projections for 2021. The BCB Focus Bulletin of June 11, 2021, for example, brought a positive growth rate for Brazilian GDP of 4.89% in 2021 against 3.08% two months ago (April 09, 2021).
To a large extent, this is because the lockdown during the second wave was less effective than expected, but also because, even if with failures, there is an ongoing vaccination process and health safety protocols are already established. In addition, the emergency aid paid to families was reinstated, although at a lower value. These aspects are very different from those seen during the first wave.