Brazil services sector steady in July as slowdown signs mount
EWZ•Brazil services activity was flat in July
Brazil's services sector activity was flat in July compared with the previous month, data from statistics agency IBGE showed on Thursday, missing expectations and reinforcing signs of a slowdown in Latin America's largest economy.
- The monthly result missed a median forecast of a 0.2% rise in a Reuters poll of economists.
- The sector posted a 0.9% year-on-year gain in July, also below a Reuters poll forecast of 1.1%.
- Services, which account for about 70% of Brazil's economy, have been moving sideways since the start of the year, IBGE analyst Luiz Carlos Almeida said.
- A tight labor market and government stimulus measures have supported consumption, but restrictive monetary policy continues to weigh on activity.
- Brazil's benchmark Selic interest rate currently stands at 14.0% after four consecutive cuts of 0.25 percentage point.
- Inter senior economist Andre Valerio expects growth moderation to persist into 2027, potentially allowing the central bank to continue Selic adjustments.
- XP economist Alexandre Maluf cited high borrowing costs and rising household debt burdens as key constraints, even as a tight labor market supports household demand.
