(Adds details, quote)
BRASILIA, Sept 11 (Reuters) - Services activity in Brazil rose in July for a second straight month, figures showed on Friday, but the pace of growth was slower than forecast, suggesting the economy’s rebound from the worst of the COVID-19 epidemic may not be quite so entrenched.
The sector expanded by a seasonally-adjusted 2.6% on the month, government statistics agency IBGE said, half the rate registered in June and less than the median 3.1% rate of growth economists in a Reuters poll had forecast.
Government officials and many economists say Brazil’s economy is rebounding strongly from a record 9.7% plunge in the second quarter. The dominant service sector’s relatively soft performance in July, however, may cast some doubt on that view.
Services sector output in July was down 11.9% from a year ago, IBGE said, more than the 10.4% decline forecast in the Reuters poll.
“The 2.6% rise was not enough to eliminate the losses observed between February and May,” IBGE research manager Rodrigo Lobo noted, referring to the four months when the sector plunged nearly 20%.
Services account for around 70% of Brazilian economic activity. Industry and manufacturing have rebounded more strongly from the crisis lows, but services are struggling much more due to social distancing protocols to stop the spread of the novel coronavirus.
June’s rate of expansion was revised up slightly to 5.2% from 5.0%. The figures mean that in the first seven months of the year, services sector activity in Latin America’s largest economy fell 8.9% from the same period in 2019, IBGE said.
Activity is picking up from the historical trough in May, but is still 22.2% lower than the peak in November 2014.
Four of the five sectors surveyed by IBGE showed increases in activity in July, most notably a 2.2% rise in information and communications services, and a 2.3% increase in transport and transport-related services, IBGE said.
After surging 12.2% in June, household services provided to families fell 3.9% in July, IBGE said. (Reporting by Jamie McGeever Editing by Paul Simao)
Our Standards: The Thomson Reuters Trust Principles.