Key insights
- Brazil's services sector contracted more than expected in March, driven by a decline in transportation. This suggests a moderation of growth due to lagged effects of restrictive monetary policy. While the central bank has started cutting interest rates, persistent price pressures in the services sector remain a concern. This news has a slightly negative influence on US equities as it reflects global economic uncertainty.
SAO PAULO, May 15 (Reuters) - Brazil’s services activity fell more than expected in March compared with the previous month, data from the statistics agency IBGE showed on Friday, with transportation the main drag.
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Services activity in Latin America’s largest economy declined 1.2% in March from February, IBGE said
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Economists in a Reuters poll had expected a 0.1% drop
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All five groups surveyed contracted in March, IBGE said, with transportation posting the steepest decline
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Persistent price pressures in the sector remain a concern for Brazil’s central bank
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The central bank last month cut its benchmark interest rate by 25 basis points for a second straight meeting to 14.50%
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Services output rose 3.0% year-on-year, also well below expectations of a 4.5% increase
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Data suggest an adjustment in activity at lower levels, reflecting the lagged effects of restrictive monetary policy, but also a moderation of strong growth, says Suno Research economist Rafael Perez