SMEs grow 8.6% in the third quarter and keep Brazilian economy warm

The turnover of small and medium-sized enterprises (SMEs) increased by 8.6% in the third quarter of 2024 in the annual comparison, according to the Omie Index of Economic Performance of SMEs (IODE-SMEs). The result represents acceleration compared to the market performance in the first half of the year (+4.3% YoY) and, with this, the advance adds 5.8% compared to the same period of the previous year.

The IODE-PMEs works as an economic thermometer of companies with revenues of up to R$50 million annually, divided into 701 economic activities that make up four major sectors: Commerce, Industry, Infrastructure and Services.

Figure 1: IODE-SMEs
(Index number 2021=100)

Source: IODE-PMEs (Omie)

Felipe Beraldi, economist and manager of Indicators and Economic Studies at Omie, management platform (ERP) in the cloud, explains that the expansion of the SME market reflects the favorable moment of economic activity in the country, driven by the maintenance of strong consumption of families. The heated labor market 7% unemployment and real incomes at higher levels 2, in addition to the expansionary fiscal policy, especially with the expansion of income transfer programs, has produced significant effects on domestic consumption.“Additionally, even though BC” has returned to raise rates at the same time of interest rates 4 may have benefited from the 2, even the cycle 2.

The SMEs of Commerce were the main contributors to the overall improvement of the market, having advanced 15,7% YoY in the third quarter of the year, consolidating the resumption movement started in the previous quarter (+4,6% YoY). The results were positive both in retail SMEs (+10,9% YoY) and wholesale (+17,4% YoY), especially for 3Packs, ‘Foods and 10 Machines and equipment for industrial use’ among the activities with better performance in retail, are (Alertial and pharmaceutical materials handling, (40Products, among the materials and Paints and Paints.

The SMEs of the industry follow the positive trend of the first half of the year (+11,5% YoY), with an additional evolution of 9% in this third quarter in the annual comparison. “In general, the expansion of the sector continues to spread among most activities, considering that, of the 22 subsectors of the manufacturing industry accompanied by the IODE-PMEs, 16 showed progress in the” transport equipment‘, Mobile’, (Print Printing and Reproduction of recordings and reproduction of electrical appliances and‘, electrical appliances and’.

In the Services sector, after a certain loss of breath in the second quarter (high of only 0.6% YoY), small and medium businesses returned to show positive results in the third quarter (+4.0% YoY). The economist explains that, despite the increase in inflation expectations and the return of the increase in interest rates, the advancement of household income guarantees the dynamism of several activities in the sector. (Transport and storage‘ administrative activities and complementary services and (Services for buildings and landscape activities’ were the activities of greatest development. 

The Infrastructure SMEs, in turn, after two quarters of fall, returned to show expansion in the third quarter of 2024 (+6,5% YoY). The result reflects the progress observed in segments such as ‘Collecting, treatment and disposal of waste, (Electricity and ’Specialized services for construction’s in recent months, the maintenance of poor performance in some segments of civil construction, such as ‘Instructure Works and ’BUILDING.

The IODE-SMEs also allows regional analysis. In the period, SMEs in the Southeast and Northeast regions had an increase of 7.9% compared to 3Q2023. The South region advanced +8.8%. In contrast, the Midwest and North regions showed a decrease in the period (-3.1% and -1.6% compared to 3Q2023, respectively).

SMEs should perform well in the short term

SMEs maintain a robust evolution trajectory, reflecting the continuity of the economic recovery in the short term. Based on recent results, the expectation of growth of small and medium businesses is +6.4%, compared to the previous year.For the last quarter of the year, it is expected that the commercial dates, such as Black Friday and year-end festivities, boost the sector even more.

For 2025, the projection is for a more moderate growth (+2.2% YoY), in line with the expectation of a slowdown in Brazilian GDP (+1.9%). According to Beraldi, the increase in inflation and the resumption of high interest rates can curb consumption and investments, with an impact especially on SMEs from the second quarter of 2025. The stabilization of the labor market and the reduction of fiscal stimuli should also contribute to a slower pace of expansion.

“Sectorially, it is expected that the rise of SMEs will continue to be concentrated in Services and Commerce sectors, driven by family consumption. Already the Industry and Infrastructure sectors, more dependent on credit, tend to be affected by high interest rates in the short term”, concludes the economist.