Brazil's services activity posts biggest expansion since 2007

By Ovunc Kutlu

ANKARA (AA) - Brazil's services business activity index has posted its sharpest expansion rate since March 2007, according to a report released by the US-based financial services company S&P Global on Tuesday.

The country's service sector growth accelerated in June, as the index rose to 60.8, up 2.2 percentage points from 58.6 in May.

"Companies commonly linked the upsurge to strong inflows of new business and accommodative demand conditions. Finance & insurance led a broad-based increase in output at the sub-sector level," S&P Global said in a statement.

New orders placed with service providers increased at the fastest rate in over 15 years, it added.

"June's data revealed a substantial pick-up in growth momentum in the Brazilian service economy, as firms welcomed an upsurge in demand," said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.

However, the inflation outlook failed to improve despite ongoing aggressive interest rate hikes, she added.

Brazil's Central Bank on June 15 made a rate hike of 50 basis points, raising its benchmark interest rate to 13.25%, and signaled more are on the way.

Inflation in Brazil is expected to come in at 8.8% in 2022 and 4% in 2023, according to the bank.