Brazil: Manufacturing PMI drops deeper into contractionary territory in January
January 3, 2022
The IHS Markit Manufacturing Purchasing Managers' Index (PMI) fell to 47.8 in January, down from 49.8 in December and marking the lowest level in 20 months. As such, the index stayed below the 50-threshold, indicating the third consecutive deterioration in business conditions from the previous month.
January’s reading was driven by sharper declines in new orders and production, amid rising Covid-19 rates, elevated inflation and rising interest rates. Moreover, firms also scaled back input purchases and hiring activity eased once again. On the price front, input prices continue to rise rapidly, albeit at the mildest rate in 19 months, with manufacturers lifting their output prices in turn.
On the reading, Pollyanna De Lima, economics associate director at IHS Markit, said:
"The difficult economic environment facing Brazilian manufacturers in recent months was compounded by the escalation of the pandemic. January's results showed the sharpest contractions in factory orders and production since May 2020. With new waves of Covid-19 seen across the globe, firms also recorded a renewed reduction in international sales. […] In some instances, companies suggested that demand was restricted by elevated inflation and an associated reduction in purchasing power among consumers."
Author: Stephen Vogado, Economist