The Business Confidence Index (ICE) had a slight drop of 0.3 point in July compared to June, to 98.5 points, informed this Monday (1st) the Fundação Getulio Vargas (FGV).
Although small, it was the first drop after four straight months of highs. In quarterly moving averages, the indicator rose by 1.3 points in the month.
According to FGV, the drop is too small to signal a change in trend, but there was a worsening in relation to the perspectives for the coming months.
“The worsening of expectations in the items that target the following six months suggests companies’ concern with a possible slowdown in the last quarter of the year. Among the factors that may be influencing this caution are the domestic monetary tightening, the prospects of a slowdown in the world economy and low consumer confidence”, says the note released by FGV.
ICE gathers confidence indicators produced by Industry, Services, Trade and Construction surveys.
The calculation takes into account the weights proportional to the participation in the economy of the investigated sectors, based on information extracted from the annual structural surveys of the Brazilian Institute of Geography and Statistics (IBGE).
According to FGV, the objective is for the ICE to allow a more consistent assessment of the pace of economic activity.
From June to July, despite the drop in aggregate ICE, FGV drew attention to the fact that the dynamics of the service sector is on a more positive trajectory than the others.
“Contrary to the average, the Service Sector continues to show strength and reaches the highest level of confidence of the four major segments surveyed, something that has not occurred since May 2012”, says the entity’s note.
As with the other FGV confidence indicators, the ICE is made up of two main components.
The Present Business Situation Index (ISA-E) rose 0.3 point to 100.3 points, the highest level since August 2021, when it stood at 100.5.
The Expectations Index (EI-E) retreated 2.1 points, to 93.7 points, pulling the aggregate ICE down. It is the lowest level since last April, when it stood at 94.4 points.
Despite the drop in the aggregate ICE from June to July, 59% of the 49 business segments surveyed in the FGV confidence surveys registered an increase.
In June, the diffusion of the positive result reached 63% of the surveyed segments.
The collection of the Business Confidence Index gathered information from 3,940 companies in the four sectors between July 1st and 27th.
Source: CNN Brasil
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