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Brazil PMI December 2022

Brazil: Manufacturing conditions deteriorate at sharpest pace in 31 months in December

The S&P Global Manufacturing Purchasing Managers Index (PMI) declined for a seventh consecutive month in December; it came in at 44.2, marginally below the previous months 44.3. Decembers reading was the weakest reading since May 2020. As a result, the index moved further below the 50.0 no-change threshold. This points to a sharper deterioration in manufacturing business conditions from the prior month.

Decembers deterioration came on the back of new export orders declining at one of the steepest rates since the series began amid subdued U.S., Latin American and European demand; fiscal and economic uncertainty has led consumers to either postpone or cut down spending. As a result, companies reduced output at the strongest pace in over 30 months. These factors led to another fall in employment levels, which dropped at the sharpest rate in two-and-a-half years.

Turning to prices, costs increased once again in December due to a weaker Brazilian real and component shortages. As a result, output charges also rose mildly—for the first time in three months—as firms tried to incentivize sales. Lastly, business sentiment improved in December; firms were more optimistic regarding growth in the coming 12-month period amid hopes of favorable public policies and improved international relations under the new administration.

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