BRASILIA (Reuters) - Activity in Brazil's services sector fell more than expected in May from a year before, government data showed on Wednesday, adding to signs that an expected economic recovery remains elusive as cash-strapped families cut back on spending.
Services activity shrank 6.1 percent in May from May 2015, compared with a 4.8 percent drop in April, statistics agency IBGE said. Economists had forecast a median drop of 3.9 percent in a Reuters poll.
IBGE released data on month-on-month growth in Brazilian services for the first time since the survey was introduced in 2011. Services activity slid 0.1 percent in May from April after seasonal adjustments, better than a drop of 1.6 percent in the prior month, IBGE said.
Brazil's economy has plunged since late 2014 as hefty government spending and cheap credit fueled inflation and spooked investors. Unemployment has surpassed 11 percent and requests for bankruptcy protection have risen from companies big and small, including telecom giant Oi SA <OIBR4.SA>.
Worse-than-expected retail sales data on Tuesday had already dented hopes of an imminent recovery. Economists forecast Latin America's largest economy to stabilize in coming months and grow a modest 1 percent next year.
Demand for accommodation and restaurant services dropped 2.8 percent in May from April, IBGE said, as families cut back on leisure spending. Air travel rose 6.2 percent, however, after cash-strapped airlines reduced fares to fill empty seats.
(Reporting by Silvio Cascione)