The Business Confidence Index (ICE) fell by 6.7 points in November compared to October, to 91.1 points, informed this Wednesday (30) the Getulio Vargas Foundation (FGV). In quarterly moving averages, the indicator yielded 3.0 points in the month.
With the retreat, the ICE was at the lowest level since February this year, when it reached 91.1 points. According to the FGV, “the sharp drop in business confidence in November is related to the perception of a slowdown in the current level of activity and the prospect of continuing this trend in the coming months”.
The ICE brings together the confidence indicators produced by the Industry, Services, Commerce 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 the FGV, the objective is for the ICE to allow a more consistent assessment of the pace of economic activity.
The FGV also assessed that “the increase in pessimism also seems to be accentuated in some segments due to doubts regarding the economic policy to be implemented from January 2023”.
“In Commerce and Industry, the drop in confidence seems to be more related to the ongoing slowdown, with concerns about the level of demand, under the impact of the more restrictive monetary policy and the limitation imposed by the high level of household indebtedness. In Services and Construction, it is the expectations that most influenced the fall in the indices in the month”, says the note released by the FGV.
Like other FGV confidence indicators, the ICE is made up of two main components. The Current Business Situation Index (ISA-E) fell 4.1 points to 95.2 points. The Expectations Index (EI-E) dropped 8.0 points to 87.9 points, pushing down the aggregate ECI. In two months, the IE-E accumulated a drop of 12.0 points, reaching the lowest level since March 2021, when the component was at 85.2 points.
Furthermore, the deterioration in confidence was widespread in November. From October to November, only 16% of the 49 business segments surveyed in the FGV confidence surveys registered a positive result. In October, the dissemination of the positive result reached 20% of the surveyed segments.
The collection of the Business Confidence Index gathered information from 3,841 companies from the four sectors between the 1st and 27th of November.
Source: CNN Brasil
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