Letter IEDI n. 1215—Partial recovery of losses
In May'23, most of the major economic sectors increased their level of activity and recovered, even partially, the losses recorded in the previous month. In any case, in Jan–May'23, the industry is still marked by stagnation, services remain upward, but with accommodation, and retail, although not helped by high interest rates, has been stimulated by sales of essential goods.
From Apr'23 to May'23, after adjusting for seasonal effects, services real revenue rose by 0.9%, after falling by 1.5% in the previous month, while industrial production varied +0.3%, that is, half the fall of Apr'23 (-0.6%). Broad retail sales, in turn, fell again: -1.1% in May'23 and -2.4% in Apr'23.
Within the industry, there were positive rates in 76% of the industrial branches surveyed by the IBGE and 73% of the regional parks. In services, this proportion reached 80% of segments and in retail only half avoided the negative ground.
In the year to May, which sets the tone for the sector in the first half of 2023, there was a setback for the national industry vis-à-vis the performance of the second half of last year and a slowdown in the growth of services revenue. Retail, hurt by inflation last year, now shows signs of some gain in speed, led by non-durable consumer goods.
In the industry, the 0.4% expansion in the 2nd half'22 gave rise to a 0.4% decline in Jan–May'23, versus the same period of the previous year. This was influenced by the worsening of losses in two macro-sectors, capital goods and intermediate goods, and by the return of three regional parks to negative rates, with two of them among the most important in the country.
São Paulo went from an expansion of 2.8% in the 2nd half'22 to a decrease of 1.8% in Jan–May'23, while Rio Grande do Sul went from +1.1% to -6.4%, and Mato Grosso from +14.8% to -1.6%, respectively. The first two cases also continued to decline in the last two months under analysis (Apr–May'23), despite some amelioration, signaling little change in the situation in the most recent period.
In the services sector, variations remained positive, but not as significant as previously. The 8.9% rise in the 1st half'22 fell to 7.7% in the 2nd half'22 and then to 4.8% in Jan–May'23, always in relation to the equivalent period of the previous year. The last two months— that is, Apr–May'23 (+3.7%) —also suggest that the sector's slowdown is underway.
This aggregate trend has been driven by three of the five branches analyzed. Services provided to households, which until much of last year had depressed bases of comparison, is the one with the most intense deceleration in 2023 (from +36.2% in the 1st half'22 to +5.9% in Jan–May'23). The other two branches are: professional, administrative and complementary services (from +8.4% to +4.6%) and transport, storage and postal services (from +13.9% to +5.7%).
Unlike industry and services, retail recorded progress, from -1.4% in the 2nd half'22 to +3.1% in Jan–May'23, in the broad concept, due to branches of non-durable consumer goods considered essential for the population, such as supermarkets, food, beverages and tobacco (+2.5% in Jan–May'23), food wholesale (+5.6%), fuels and lubricants (+15.5%), responsible for the best result in Jan–May'23, and pharmaceutical, orthopedic and perfumery articles (+1.9%).
The performance of retail, however, is constrained by the branches of durable and semi-durable consumer goods, whose sales, to a greater or lesser extent, require credit to occur. Other articles of personal and household use, fabrics, clothing and footwear, and building material are in the red; furniture and household appliances and office, computer and communication supplies are very close to mere stability.