Brazil PMI May 2016


Manufacturing PMI continues to worsen in May

The Markit manufacturing Purchasing Managers’ Index (PMI) fell in May, hitting a new multi-year low. The index decreased from April’s 42.6 to 41.6—the worst result in over seven years. The PMI remains far below the 50-threshold that separates contraction from expansion in business conditions in the manufacturing sector, amid a deep recession in the Brazilian economy.

According to Markit, May’s deterioration came on the back of the largest contractions in output and new orders in over seven years. In addition, the ongoing economic recession led manufacturers to shed jobs at the fastest rate in survey history. Input costs continued to climb and hit an over seven-year high on the back of a weak real. Commenting on the result, Markit analysts added that: “the economic and political crises that Brazil has been facing continued to hamper demand and businesses have been left with no other option but to dismiss employees as part of efforts to remain afloat. This record contraction in payroll numbers is likely to further aggravate domestic demand as we move into the second half of the year.“

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Brazil PMI Chart

Brazil PMI May 2016

Note: Markit HSBC Brazil Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: HSBC and Markit.

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