Brazil: Manufacturing PMI remains in contractionary territory in February
The IHS Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 49.6 in February, rising from 47.8 in January which had marked the lowest level in 20 months. As such, the index moved closer to, but stayed just below the 50-threshold, indicating the fourth consecutive deterioration in business conditions from the previous month.
February’s reading was driven by softer declines in new orders and production, amid muted demand, elevated inflation and rising interest rates. Moreover, firms also scaled back purchasing activity and employment levels eased once again, albeit only fractionally. On the price front, input prices continue to rise rapidly, albeit at the mildest rate since May 2020, with manufacturers lifting their output prices in turn.
On the reading, Pollyanna De Lima, economics associate director at IHS Markit, said:
“While the Brazilian manufacturing sector continued to see business conditions deteriorate in February, the latest PMI data suggest that there are brighter times on the horizon. Firms reported signs of improvement in demand, leading to near-stabilisations of both output and employment. Meanwhile, there were also signs of a normalisation in supply chains, with delivery times lengthening to the least marked extent in two years. Similarly, inflationary pressures continued to ease. Dysfunction in supply chains has been a key barrier to growth for some time, and so any improvements will provide a boost to operations. Supporting this more positive picture, firms were increasingly optimistic that their output will expand over the coming year.”