UPDATE 1-Brazil services activity grows less than expected in December
(Updates throughout with more detail)
SAO PAULO, Feb 9 (Reuters) - The Brazilian services sector grew less than expected in December but still closed 2023 with gains for the third year in a row, despite a sharp loss in momentum.
In December, the sector saw a 0.3% rise in volume compared to the previous month, according to data released on Friday by the Brazilian Institute of Geography and Statistics (IBGE), below expectations in a Reuters poll of a 0.7% rise.
When compared to the same month of the previous year, there was a 2.0% drop in sales volume, the sharpest since January 2021 and compared to expectations of a 1.7% decline.
The sector ended 2023 with accumulated growth of 2.3% in volume, losing momentum after growth of 10.9% and 8.3% respectively in 2021 and 2022, the years in which the country recovered from the COVID-19 pandemic.
The last time the services sector grew for three consecutive years was between 2012 and 2014, according to the IBGE.
The services sector is still 11.7% above the pre-pandemic level and 1.7% below the highest point in the historical series, in December 2022.
The services sector had a year of ups and downs in 2023 and enters 2024 with challenges to maintain its resilience. The strength of the labor market and falling inflation are helping the sector, and borrowing costs are still high despite the monetary easing cycle in course.
The basic Selic rate is currently at 11.25% following five consecutive 50 basis-point cuts since last August. (Reporting by Camila Moreira and Steven Grattan Editing by Frances Kerry)