Brazil services activity falls a record 6.9% in March

BRASILIA, May 12 (Reuters) - Services activity in Brazil shrank 6.9% in March, official figures showed on Tuesday, the biggest fall since comparable recordkeeping began nearly a decade ago and a stark indication of the economic damage wrought by the coronavirus crisis.

Services account for around two-thirds of Brazilian economic activity, and much of them have been virtually shut down as a result of the strict virus-linked policies restricting people's movement in key states like Sao Paulo and Rio de Janeiro.

That was more than the 5.8% month-on-month drop forecast in a Reuters poll of economists and the biggest fall since statistics agency IBGE began the series in January 2011.

All five sectors surveyed by IBGE showed a decline in activity, with families-related services, which include hotels and restaurants, plunging 31.2% and transport and transport-related services falling 9%.

"Some companies in non-essential sectors, like restaurants, were able to partially function, often migrating to the delivery system, but hotels don't have that option and they ended up closing," said survey director Rodrigo Lobo.

The figures for March were heavily weighed by the last 10 days of the month when lockdown and social isolation measures were implemented, Lobo said, indicating that the decline in April activity may be even greater.

The drop-off in hotel and restaurant services, together with declining flights and travel operator activity, also fueled a record 30% fall in the tourist activity index in March, IBGE said.

On an year-on-year basis, overall services sector activity in Brazil fell 2.7% in March, IBGE said, less than the 4.1% fall forecast in a Reuters poll.