Brazil: Manufacturing PMI drops in August
September 1, 2016
The Markit manufacturing Purchasing Managers’ Index (PMI) fell in August, decreasing from July’s 46.0 to 45.7. The PMI remains below the 50-threshold that separates contraction from expansion in business conditions in the manufacturing sector as the Brazilian economy undergoes a deep recession.
According to IHS Markit, August’s setback came on the back more of a pronounced contraction in total new orders, new export orders, purchases and payrolls. While output continued to decline, the pace of contraction eased to the slowest in 19 months. Commenting on the result, IHS Markit analysts added that, “August saw no end to the problems affecting the Brazilian manufacturing industry as the economic crisis continued to restrict demand. Purchasing activity and employment decreased sharply, with companies battling the recession with cost-reduction initiatives. One potential source of comfort from the latest survey was a softer contraction in production volumes, although this was partly due to the clearing of unfinished projects. Whereas a stabilization of Brazil’s political crisis is expected to boost business and consumer confidence, an imminent upturn is unlikely.”