IBGE Reports Strong Brazil Services Growth as Unemployment Remains Low

Brazil’s service sector output grew by a stronger-than-expected 1.2% in April, fully recovering from the previous month’s decline and signaling robust domestic demand in Latin America’s largest economy.

The result, released on today by the Brazilian Institute of Geography and Statistics (IBGE), significantly outperformed the 0.6% growth forecast as predicted by the Brazilian financial market. On a year-over-year basis, service volume expanded by 1.9%, marking the 25th consecutive month of positive growth.

DISSEMINATED GROWTH ACROSS SECTORS

All five major activities surveyed by the IBGE showed gains in April. The transport sector, which rose 0.9%, was the primary driver of the index. This growth was largely attributed to a 7.0% surge in air passenger transport, which rebounded following a sharp drop in ticket prices (down 14.45% in April after double-digit hikes in previous months).

"April brought a full recovery from the setback observed in March," said Rodrigo Lobo, research manager at the IBGE. "The movement was widespread; while all five sectors retreated in March, they all moved in the opposite direction and grew in April."

Other key sectoral highlights include:

• Tourism: Grew 4.1% in April, recovering a significant portion of the losses from the prior two months. The segment is now 11.2% above its pre-pandemic levels;
• Information and Communication: Rose 6.3% year-over-year, bolstered by strong revenues in software development, IT consulting, and internet hosting services;
• Passenger Transport: Advanced 2.6% month-over-month, though cargo transport saw a slight retreat of 0.9%.

REGIONAL DYNAMICS

From a regional perspective, 14 of Brazil's 27 federative units recorded growth. São Paulo, the country's industrial and financial heartland, was the most significant positive contributor with a 1.4% increase, driven by legal activities, air transport, and auxiliary financial services. Conversely, Rio de Janeiro (-3.6%) and the Federal District (-5.5%) saw the sharpest declines.

ECONOMIC OUTLOOK

The service sector, which accounts for approximately 70% of Brazil’s GDP, is currently operating just 0.3% below its historic peak reached in October 2025.

While the sector remains at an elevated level, economists note that its trajectory lacks a definitive trend, as it navigates a landscape of strong labor market conditions balanced against high interest rates. The accumulated growth for the first four months of 2026 stands at 2.2% compared to the same period last year.