March 29, 2017 / 1:54 PM / 10 months ago

UPDATE 1-Brazil services sector drops at record speed in January

(Adds details on record drop)

BRASILIA, March 29 (Reuters) - Services activity in Brazil fell in January at the fastest pace on record, government data showed on Wednesday, dampening expectations of an imminent end to the country’s deep recession.

Services activity shrank 2.2 percent from December after seasonal adjustments, down from an increase of 0.7 percent in the previous month. Forecasts were for a 0.5 percent drop in a Reuters poll of economists.

Services activity, which accounts for about 60 percent of Brazil’s economy, declined 7.3 percent in January from the same month last year, statistics agency IBGE said.

The sharp drop in services such as hotels, transportation and media contrasted with promising signs from manufacturers and farmers, which had fueled hopes of an economic recovery soon. Industrial output grew in January on an annual basis for the first time in nearly 3 years.

Economists and the government expect Brazil’s economy to grow about 0.5 percent this year after two years of sharp contraction. The recession has sent unemployment to record highs and cost Brazil its investment-grade debt rating. (Reporting by Silvio Cascione and Bruno Federowski; Editing by Jeffrey Benkoe)

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