Brazil: Manufacturing conditions improve at softer pace in November
December 1, 2020
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, dropped to 64.0 in November from 66.7 in October, which had marked the best reading since the survey began in February 2006. However, the index still remained well above the 50-threshold, indicating an improvement in business conditions in the Brazilian manufacturing sector.
November’s reading largely reflected a steep increase in new orders amid solid demand conditions, particularly boosted by new export business, which rose at a record pace. Consequently, this led to robust output growth, albeit the rate of expansion moderated to a four-month low as lack of materials restricted production, weighing on the overall reading. Meanwhile, employment levels increased at the fastest clip on record due to upbeat sentiment among Brazilian firms as they remained optimistic about the outlook for production in the coming year.
On the price front, both input costs as well as output charges increased at record rates in November, largely owing to raw material shortages, currency weakness against the U.S. dollar and strong demand for inputs.
Author: Hanna Andersson, Economist