There was progress in the level of economic activity from February to March 2022, when all three major sectors managed to register positive performances. The leadership fell to services, with +1.7%, after adjusting for seasonal effects, followed by retail (+0.7% in its broad concept) and then by the industry, with +0.3%, which was closer to stability than growth.

Another similarity at the end of the quarter: positive figures prevailed across the different branches of the three sectors, but again the industry came last. In this regard, services also came out first, with 100% of its segments registering an increase in revenue, ahead of retail, with 70% of its branches in the black and, then, the industry, with 54% of the branches monitored by the IBGE managing to advance in relation to Feb'22.

That is, the recent trend remained, with the industry underperforming other activities even when its output grows. In this case, in addition to the weaknesses in demand stemming from inflation and unemployment, which restrict the evolution of all sectors, the industry still faces serious supply problems, due to the bottlenecks in its input chains.

The figures for Q1'22 leave no doubt about the divergence of trajectories. While the service sector expanded by +9.5% and retail trade grew +1.1% against Q1'21, industrial production shrank -4.5%.

It was its third consecutive quarter of decline and the big difference of Q1'22 in relation to previous periods is that there was no exception, with all macro-sectors in the red: -2.6% in capital goods, -3.4% in intermediate goods, -4.4% in semi and non-durable consumer goods and -18.3% in durable consumer goods.

The regional picture of the sector also indicates a great diffusion of negative signs: only 1/3 of the fifteen locations monitored by the IBGE were in the black, especially Rio de Janeiro. In the 2/3 of the regional parks in the red, the most intense drops were recorded in Ceará and Pará, while São Paulo (-3.7% versus Q1'21) softened the total national decline.

Thus, even though the general level of economic activity may have been positive in this first quarter of 2022, thanks to services and retail, its consistency is still compromised with the adverse evolution of the industry, as it is the sector with the largest number of intra and intersectoral interactions.

As for retail trade, Q1'22 had the help of low bases of comparison, given the restrictive COVID-related measures in some regions at the beginning of last year, such as São Paulo, which spent much of March in the so-called “red phase.” But it is also important to remember that, although slowly, employment has evolved favorably, which stimulates sales. 

Of the ten branches monitored by the IBGE, six registered sales expansion in Q1'22 and four continued to shrink. Among those with negative figures, we should highlight supermarkets, food, beverage and tobacco (-0.9%), which represents 1/3 of broad retail as a whole and suffers directly from the effects of rising inflation. 

As for those whose sales expanded, the best results came from books, newspapers, magazines and stationery (+24.7%), favored by the return to classrooms, and fabrics, clothing and footwear (+24.1%), which remains very far from the pre-pandemic level. In the durable consumer goods segments, with the exception of vehicles (+3.5%), performance was very timid at the beginning of the year. 

In services, only one of the five segments identified by the IBGE did not grow in Jan–Mar'22. Compared to the result of Q4'21, three of the five segments even gained speed, notably services provided to households, with the persistent reduction of COVID-19 cases in Feb'22 and Mar'22, after the rebound caused by the omicron variant.

The other two segments with more robust growth rates were: transport services (+15.5% compared to Q1'21), with an important contribution from air and land transport; and professional, administrative and complementary services, which registered +8%.

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