Brazil: Manufacturing PMI drops to lowest level in nearly four years
September 3, 2015
The Markit manufacturing Purchasing Managers’ Index (PMI) dropped from July’s 47.2 to 45.8 in August, which marked the lowest reading since September 2011. As a result, the PMI index is now further below the 50-threshold that separates contraction from expansion in business conditions in the manufacturing sector.
According to Markit, August’s figure came on the back of a decrease in manufacturing output, which dropped at a sharper pace compared to July. Moreover, in August, new orders contracted at the steepest rate in nearly four years, which prompted Brazilian manufactures to scale back production for the seventh consecutive month. New businesses from abroad dropped again, albeit only marginally. Markit analysts added that, “echoing lacklustre demand conditions, Brazilian manufacturers continue to absorb cost increases, with the rate of cost inflation further exceeding that for charges. […]The country has been suffering from major capital outflows, reflecting a toxic combination of deteriorating investor confidence, lower commodity prices and expectations of a rate hike in the US.”