Business demography and the pandemic in São Paulo: Preliminary evidence

By Alexandre Samy de Castro and Bruno Filomeno da Rocha

This paper presents data on business startups and shutdowns in the state of São Paulo, in the seven weeks follwing the start of the social distancing measures in the state – between March 18 and May 5, 2020. The data reveals plummeting startups and shutdowns, in the order of 72% and 93% respectively. Likewise, the opening and closing of branches declined sharply, both by 73%. Disaggregating the data by economic activity, we observed significant differences in business startups: the sectors of information and communication (-55%), human health (-59%) and professional, scientific and technical activities (-65%) exhibited less severe declines compared to the aggregate average. On the other hand, the sectors of arts, culture, sports and recreation (-83%), other service activities (-83%), construction (-80%) and accommodation and food (-80%) stood out, with declines significantly larger than the average.

Despite the slump in business startups, still nearly 8,000 firms were established in the state of Sao Paulo after the beginning of the pandemic. Retail trade, clothing, footwear, fabrics, bedding, lighting and appliances significantly reduced their share in startups, while computer and telecom equipment and and liquefied petroleum gas (cylinders) increased. In office service activities, the organization of events contracted alongside with a relative expansion in administrative support and services. In wholesale trade, machinery, equipment (excluding information and communication technologies), lost to other segments, such as food and agricultural inputs. In land transport, the passenger (cargo) segment exhibited a sharp, relative drop (increase). The highlight of the data is the relative strength of entrepreneurship in professional, scientific and technical activities and financial services, with emphasis on advertising, business management consulting, architectural and engineering services and accounting/auditing activities. ​

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