SAO PAULO (Reuters) - Services activity in Brazil fell more than expected in November, statistics agency IBGE said on Wednesday, the latest in a series of data indicating that the local economy might be cooling amid tight financial conditions.
Service sector activity, the main engine of Brazil's economy, slipped 0.9% in November from the previous month, IBGE said, the biggest monthly drop since April 2023.
Economists polled by Reuters had expected a 0.3% fall.
The sector's positive performance throughout 2024 helped Brazil's gross domestic product (GDP) surprise on the upside last year, but elevated borrowing costs are expected to keep growth in check going forward.
The local central bank has been hiking interest rates in a bid to bring inflation back to its 3% target after robust activity, a tight labor market, fiscal concerns and a weakening currency pushed consumer price readings and expectations up.
"The service data indicates a slowdown. The scenario should remain restrictive for activity," lender Inter's chief economist Rafaela Vitoria said.
IBGE data had already shown negative readings for retail sales and industrial output in November.
The monthly services drop, the statistics agency said, was driven mainly by transportation (-2.7%) and professional services (-2.6%).
On a yearly basis, Brazil's service sector grew 2.9% in November, it added. Economists had forecast a median rise of 3.4% in a Reuters poll.