Brazil: Manufacturing PMI falls into contractionary territory in November
December 1, 2021
The IHS Markit Manufacturing Purchasing Managers' Index (PMI) fell to 49.8 in November, down from 51.7 in October and hitting its lowest level in 18 months. As such, the index moved below the 50-threshold, indicating the first deterioration in business conditions from the previous month since May 2020.
November’s lower reading was driven by a sharper fall in new orders and production, amid supply-chain disruptions and rising interest rates. Moreover, hiring activity eased. On the price front, shortages amid high demand for raw materials saw input prices continue to rise rapidly, with manufacturers lifting their output prices in turn.
On the reading, Pollyanna De Lima, economics associate director at IHS Markit, said:
"The resilience of the Brazilian manufacturing sector recovery was tested once again in November, with firms struggling to secure new work due to elevated output charges and rising interest rates. As a result, companies scaled back production volumes at the fastest rate in a year-and-half. While firms had been able to comfortably transfer rising cost burdens to clients in recent months and still secure a healthy amount of new work, mounting inflationary pressures weighed considerably on the performance of the sector as we head towards the year end, a situation that is likely to prevail in the near-term.”
Author: Stephen Vogado, Economist