months of declines and was well above expectations in a Reuters poll, which predicted a 1.0% increase. The service sector closed 2022 with a cumulative increase of 8.3% and is now 14.4% above the level of February 2020, pre-pandemic. It also reached a record level in the historical series, which began in 2011. On a yearly basis, services activity in Latin America's largest economy rose 6.0% in December, IBGE added, also topping economists' projections of 3.9%. Services experienced a boost last year as the economy reopened following the COVID-19 pandemic, but that momentum is likely to fizzle out as the effects of monetary tightening weigh more heavily. "Services showed more resilience over 2022 than trade and manufacturing, which had already been bearing the negative effects of high interest rates and the global economic slowdown," said Claudia Moreno, an economist at C6 Bank. "Like other economic sectors, services should also begin to feel the delayed effects of the interest rate hikes and the global economic slowdown more strongly. So, going forward, we should see services moving sideways or even contracting".
IBGE highlighted the performance of the transport sector in December, up 2.5% over the previous month, which was also a highlight in the whole of 2022, with a cumulative growth in the volume of services of 13.3%. "The transport sector has been growing since 2020, but with different dynamics: initially, because of the logistics area, with a rise in delivery services replacing in-person purchases; now, also supported by cargo transportation and tourism," said research manager Luiz Almeida. (Reporting by Camila Moreira and Rodrigo Viga Gaier; Writing by Steven Grattan; Editing by Jonathan Oatis)
