Due to the effects of the coronavirus pandemic, trade confidence plummets in March according to FGV. It is the biggest drop since the survey began.
According to the publication by the Getúlio Vargas Foundation (FGV) this Wednesday (25), the Commerce confidence index fell 11.7 points in March compared to February, reaching 88.1 points.
This drop is already a result of the effects of the coronavirus and was the largest since the beginning of the survey in 2010. The lowest value had been in August 2017 when the level reached 85.6 points.
“The drop in retail confidence in March is an early sign of the impact of the coronavirus pandemic on the sector. The sharp drop was due to a review of expectations by businesspeople, who are concerned about the direction of business in the coming months,” Rodolpho Tobler, Coordinator of the FGV IBRE Retail Survey, said in a note.
Expectation index plummets
The expectations index, one of the components of the indicator, fell by 24.3 points. The index was influenced by the deterioration of expectations regarding sales and the business trend in the coming months in all the different segments. Mainly in the vehicle, furniture and home appliance trade sector.
On the other hand, the Current Situation Index recorded a slight improvement in relation to certain segments, such as hypermarkets and supermarkets and pharmaceuticals. “In the short term, the expectation is still for a reduction in the pace of sales, especially during this period when there is a need to close businesses and isolate consumers,” said Tobler.
Quarterly result
In the last quarters of 2019, the index showed positive results, but confidence fell in the first quarter of 2020. The decline in expectations began before the coronavirus pandemic, which intensified it even further.
“Beyond expectations, ISA-COM also fell again after two quarters of growth, showing that even before the coronavirus, the sector was already recovering slowly,” pointed out the FGV coordinator.