Brazilian Services Activity Surges in September

SAO PAULO (Reuters) – Services activity in Brazil grew more than expected in September, reaching a record high, signaling economic strength following the central bank’s monetary tightening to combat inflation.

The service sector in Latin America's largest economy rose 1.0% in September from August, according to the statistics agency IBGE. This increase surpassed the 0.7% rise forecasted in a Reuters poll of economists.

Year-over-year, the sector increased by 4.0%, beating the median forecast of 3.5%.

According to Rodrigo Lobo, IBGE's survey manager, "In September we had several sectors that boosted the volume of services, such as engineering companies, musical festival production, pipeline transport, and book publishing and printing."

In response to rising inflation, Brazil's central bank accelerated its monetary tightening last week, implementing a 50 basis-point hike that raised rates to 11.25%.

Ongoing strong economic activity, a tight labor market, fiscal concerns, and a weakening Brazilian real against the U.S. dollar have been contributing to rising inflation expectations in the country.