Brazil: Manufacturing PMI falls in January, hints at cooling momentum
February 1, 2021
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, fell to 56.6 in January, a notable drop from December’s 61.5. That said, the index still remained above the 50-threshold, signaling an improvement in business conditions compared to the previous month—albeit the result hints at a loss of momentum in the Brazilian manufacturing sector.
January’s result largely reflected softer growth in new orders, which expanded at the weakest rate in seven months largely owing to subdued demand. Moreover, new export orders broadly stagnated after having posted expansions for four months straight. Meanwhile, output growth also slowed from the previous month amid capacity constraints, raw material shortages and Covid-19 worries. Regarding employment, the rate of job creation was the softest in seven months in January. On the price front, input costs increased in the month, albeit at the weakest pace in six months, while output charges also rose as firms passed on expenses to customers. Lastly, firms remained optimistic regarding the outlook for the coming twelve months, supported by the deployment of coronavirus vaccines.
Author: Hanna Andersson, Economist