Trade Confidence in Brazil falls to lowest level since May – FGV

RIO DE JANEIRO, BRAZIL – The Trade Confidence Index (Icom), from the Brazilian Institute of Economy of the Getulio Vargas Foundation (FGV Ibre), dropped 6.8 points in September, to 94.1 points, the lowest level since May of this year (93.7 points). In quarterly moving averages, the indicator fell (0.6 points) after four consecutive highs.

“Trade confidence ends the third quarter in decline. The negative result is the combination of the worsening of both the perception about the current sales volume and expectations, generating doubts about the pace of recovery in the coming months. The greater caution of consumers has been an important obstacle and the recent inflation and the still delicate scenario of the labor market. The pandemic shows itself more controlled, but it is still an element that adds uncertainty to the recovery of the sector in the coming months,” evaluates Rodolpho Tobler, coordinator of the FGV Ibre’s Trade Survey, to Valor in a commentary on the report.

In September, the drop in confidence was widespread in the six main segments of the sector. The result for the month was a combination of the worsening of both the perception of the present moment and expectations. The Present Situation Index (ISA-COM) dropped 5.9 to 99.1 points, while the Expectations Index (IE-COM) dropped 7.3 to 89.4 points.

After feeling the impacts of the second wave of Covid-19 at the turn of the first to the second quarter of 2021, trade confidence measured in quarterly averages maintained the positive trend in the third quarter with strong influence from the improvement on the perception with the present. The easing of restrictive measures and the reduction of negative pandemic numbers contributed to the recovery of the quarterly ISA-COM.

The lower level of the IE-COM suggests that there is still a lot of uncertainty regarding the continuity of this recovery in the coming months. “It is important to note that the latest data for the third quarter already show a slowdown in the recovery of the sector, turning on the yellow light about the performance of the sector at the end of the year,” adds Tobler.

The survey collected information from 807 companies between September 1st and 24th. The next Trade Survey will take place on October 28.

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