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Brazil PMI January 2023

Brazil: Manufacturing conditions deteriorate at milder pace in January

The S&P Global Manufacturing Purchasing Managers’ Index (PMI) reversed a seven-month-long streak of declines and rose to 47.5 in January from December’s 31-month low of 44.2. As a result, the index moved closer to—but remained below—the 50.0 no-change threshold. This points to a milder deterioration in manufacturing business conditions from the prior month.

January’s uptick came on the back of softer declines in both new orders and output. New orders dropped at the slowest pace in four months. That said, sales continued to contract due to higher prices weakening demand and uncertainty over domestic fiscal policy. On an international level, sales were dampened by weaker demand from Latin America amid recession fears and an overall challenging global environment. Consequently, firms continued to cut output in January, but they did so at the softest pace since September 2022. Weak demand, reduced production and efforts to cut costs led to yet another month of job shedding—although also at a more moderate pace.

Turning to prices, input costs rose at the strongest pace in five months in January due to brisker increases in prices for food, metals, plastics and some imported components. Lastly, firms remained optimistic about growth prospects thanks to an expected recovery of demand, investment and the launch of new products. Sentiment fell from December, however, amid uncertainty over fiscal policy under the new administration and elevated borrowing costs.

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