Services activity in Brazil slumped 11.7% in April, figures showed on Wednesday, the biggest fall since comparable record-keeping began nearly a decade ago as social isolation measures to combat the COVID-19 outbreak slammed the economy into reverse.
Coming a day after data showed a record crash in April retail sales, the economy’s incredibly weak start to the second quarter would appear to justify the expected cut in interest rates to a new low by the central bank later on Wednesday.
Services account for around 70% of Brazilian economic activity, and April reflected the first full month of strict coronavirus-linked policies restricting people’s movement in key states like Sao Paulo and Rio de Janeiro.
According to statistics agency IBGE, the level of service sector activity in Brazil is now 27% lower than the peak in November 2014.
The 11.7% month-on-month fall in April was more than the 10.5% drop forecast in a Reuters poll of economists and the biggest fall since IBGE began the series in January 2011.
All five sectors surveyed by IBGE showed record declines in activity, with families-related services, which include hotels and restaurants, plunging 44.1% and transport and transport-related services falling 17.8%.
On an year-on-year basis, services sector activity in Brazil fell 17.2% in April, IBGE said, also a record and more than the 15.8% fall forecast in a Reuters poll.
The IBGE figures tally with IHS Markit’s services purchasing managers index which fell to a record low 27.4 in April and remained at a depressed 27.6 in May, pointing to a deepening economic contraction.
The central bank is widely expected to cut its benchmark Selic interest rate by 75 basis points to a new all-time low of 2.25% on Wednesday.