Fynsa
After a positive surprise in July, the Imacec showed a new year-on-year decline in August, higher than what the market expected. The 0.9% decline was in contrast to the 0.1% projected by the consensus (-0.5% YoY us), which was mainly explained by the reduction in the services and commerce sectors.
Within the services sector, it was specified in the Central Bank's press release, that those with the greatest negative impact were the education sector. Unfortunately, due to the way the information was provided, we do not know what the specific impact was, but only the impact of the sector as a whole: -0.6 pp.. It is a good idea to remember that, for the data delivered for July, part of the higher than expected increase came from a surprise precisely in education services, for a reason that has little to do with economic growth (in my opinion): during 2023 there were fewer winter vacation days than in 2022, a year in which they were extended due to the proliferation of various respiratory viruses. This makes sense, since it was a general policy, covering all establishments, both public and private, by an additional week.
It has been argued that the drop in education services in August was due to the teachers' strike, which lasted 48 hours at the beginning of the month. This effectively has a negative impact on activity, which was also evidenced in the seasonally adjusted monthly variation of the services sector (again, unfortunately in aggregate and not in particular) of -0.4 pp. To contextualize, education services have a weight within GDP of approximately 5% (5.1% for 2018) and is composed of 61% of public education, while private education represents 39%.
Although this explanation seems plausible to us, it omits the economic weakness evidenced by all other sectors. A 2-day stoppage, for the relative weight of the affected group, is not enough to argue that the economy is not growing for this reason. With greater or lesser volatility, the rest of the economy does not rebound and is so flat that a minor situation within the country's economic activity as a whole is capable of affecting the total variation. Moreover, eliminating all that effect, according to our estimates, the economy would have fallen 0.5% YoY, exactly what we had projected.
The low growth capacity of our economy should be a major concern, beyond the monthly data. Recently, the National Productivity Commission has published a series of reports showing the enormous obstacles that various industries face to invest and to be able to grow, innovate and hire. The various regulations, many of them unconnected, contradictory and outdated, even prevent competition and the entry of new players, with all the negative effects on producers, consumers and the State itself. Policies focused on solving these problems should be the ones that dominate legislative agendas, so that tomorrow, a two-day strike by a particular trade union will not even move the needle in the Imacec.
