Brazil: Manufacturing PMI deteriorates in October
The S&P Global Manufacturing Purchasing Managers’ Index (PMI) fell to a three-month low of 48.6 in October from September’s 49.0. As such, the index fell further below the 50.0 no-change threshold, signaling a sharper deterioration in manufacturing sector operating conditions compared to the previous month.
October’s extension of the previous month’s downturn was due to a steeper contraction in output. Weak demand conditions weighed on new orders, which declined at the sharpest pace in four months. Specifically, exports decreased at the quickest pace since March due to challenging economic conditions in Argentina and higher competition spurred by subdued new orders for goods globally. That said, the job creation rate accelerated to a three-month peak.
Turning to prices, operating costs fell again, leading to a faster decline in selling prices than in September amid discounts in an effort to combat increasing competition and weakening demand. Moreover, these factors and concerns surrounding taxation, still-elevated interest rates and elevated public debt levels led business sentiment to drop to a six-month low, although it remained optimistic.
Pollyanna De Lima, economics associate director at S&P Global, noted: “There is silver lining in the fact that demand retrenchment continued to warrant price falls. […] The slowdown in manufacturing activity provided welcome news in terms of improved resource availability among suppliers, helping drag raw material prices down. […] This, alongside competitive conditions and sales boosting efforts, continued to filter through to cuts in factory gate charges which could support sales in the coming months.”