Trade entrepreneur confidence drops to 3.6% in January

The Commerce Entrepreneur Confidence Index (Icec) released this Friday (27), in January fell in comparison with the previous month, seasonal effects discounted, and reached 119 points. The National Confederation of Trade in Goods, Services and Tourism (CNC) measured the indicator, which was the second consecutive fall. The index ranges from zero to 200 points, with results above 100 indicating optimism.

According to the CNC, given the monthly reduction in all indicators, trader optimism reached its lowest level since April 2022. The 6.4% drop in the short-term expectations index drew attention.

According to the survey, this slowdown in economic activity in general, mainly retail at the end of last year, traders’ perspectives on the economy reached 125.7 points and the commerce sector reached 139 points, both of which are the lowest levels since April 2021.

CNC president José Roberto Tadros pointed out that given the slowdown in the creation of jobs in the job market and the high level of household debt, consumers are becoming more cautious, a scenario that should persist through 2023.

“The trade of goods and services, which represents a large part of the Brazilian GDP and generates the majority of formal jobs, is feeling the slowdown in sales caused by the combination of persistent inflation and high interest rates”, he observed.

The share of retailers who believe in a worsening economic scenario in the coming months rose from 12.1% in November to 31.4% in January. In terms of retail performance, the percentage of merchants who have the prospect of worsening sales, went from 9.3% in November to 23.7% in January.

The economist at CNC, Izis Ferreira, pointed out that for the past two months traders have been experiencing a rapid deterioration in expectations about the performance of economic activity and trade this year.

Investments

The CNC specialist points out that with the reduction in sales, retailers are redoing their planning for 2023. “The worsening perception of current conditions and expectations is leading traders to reassess investments in the company and in replenishing stocks”, she indicates.

The Icec also pointed to the fifth consecutive fall in the intention to invest in the business, which retreated 3.9% from December to January, making the index reach 109.4 points. Of the total number of merchants, 42.4% intend to reduce investments. The percentage is the highest since June last year.

According to the CNC, shopkeepers in all retail segments revealed that they are going to reduce investments. According to the entity, the highlight of the indicator is the fall of 5% compared to December among durable goods retailers, which led the index to 103.4 points.

With a drop of 0.3%, there was also a worsening in the assessment of traders on the level of inventories in January. The indicator reached 94.6 points. The share of merchants who assess inventories as adequate represents 60% of total retailers. It is the lowest since June 2021.

“Interest rates will remain high at least until the third quarter of this year, which should reverberate negatively on the consumption of goods dependent on credit,” he said.

Also noteworthy was the 10.4% reduction in the intention to hire new employees, compared to January 2021, added to the 6.7% drop compared to December. The index stood at 122.9 points, still on the optimism spectrum.

In the view of the economist, traditionally, as it is a period of lower sales, January is a time of reduction in hiring. In addition, the hiring of part of the temporary employees carried out until December leads to a reduction in the intention to create new vacancies.

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