The improvement is supported by a lower diversion of consumption towards Argentina and an increase in the average household income, according to the Chamber of Commerce and Services of Uruguay.
The Chamber of Commerce and Services of Uruguay (CCSUy) presented the activity report for the first quarter, which recorded a “relevance growth” of 4.1% from real sales interannual. The sector had been going through a contraction phase since the second quarter of 2023, so this change in trend is doubly positive for the economy.
Sales of the sector Business and services grew 4.1% year-on-year during the first quarter of the year, after three consecutive quarters of poor performance, particularly due to the diversion of consumption to Argentina by exchange difference. The improvement was widespread in all areas, also compared to the last quarter of 2023, thus reaching a diffusion index 64%, a figure that has not been obtained since 2021 with the post-pandemic rebound.
Likewise, the report of the CCSUy indicated a greater number of items in positive territory, with some even accelerating with respect to their previous growth records, such as Dress (13.5%) and Computing (6.7%). However, those that drew the most attention are those that, in previous periods, showed negative results but grew during the first quarter of 2024: Personal care (0.8%), Supermarkets (4.2%), Vehicles, Automotive Parts and Fuel (3.6%), Real estate (3%) and Minimarkets (1%). The most significant case was that of Personal Care, which was coming off eight consecutive quarters of decline in sales.
On the other hand, the items that continue to register falls in their sales levels were Home appliances (-5.1%), Furniture and home accessories (-6.2%) and Optics (-7.6%).
What happened in the Services sector?
Unlike what was recorded in the last quarters of 2023, the sector Services achieved an increase in sales in both Montevideo (1.4%) as in the Inside (0.7%).
In the case of Services, Restaurants and confectioneries, the item continued to grow in its level of real sales, with a record of 1.3% for the first quarter of the year. The report also positively highlighted the performance of Real Estate; while the Travel agency fell 5.6% in the period January-March 2024. Finally, the item Hotels fell again (-0.8%), although much more moderately than the two previous quarters, when the records were -1.1% and -8.4%, respectively.
In the analysis of companies by size, performance was positively correlated with size. That is, the large ones were the ones that showed the most notable advances, with a growth in sales of 5.6%, followed by the medium ones with 3.5%. The small ones barely grew in their sales (0.1%) and the micro ones showed a new decline, with a fall of -4.6%, going through a contractive scenario which has been going on for two years now.
Among the factors pointed out by the CCSUy as an explanation of the improvement in the sector’s sales performance, they highlighted the lower drain of consumption towards Argentina—in line with lower records of outbound tourism and greater inbound tourism—as well as the improvement in income half of homes along with lower inflation that drove the increase in consumption.
Source: Ambito
