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Brazil PMI August 2020

Brazil: Manufacturing PMI hits jumps to new record high in August

The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, shot up to 64.7 in August from 58.2 in July, marking a new record high as the recovery from the pandemic gained further ground. As such, the index moved further above the 50-threshold, indicating an improvement in business conditions in the manufacturing sector.

August’s notable upturn was largely driven by firming demand and domestic market activity. Manufacturing output and new orders both rose at record paces in August; however, exports sales continued to declines amid weak external demand. For its part, employment rose at the fastest clip in over 10 years amid rising backlogs of work.

On the price front, input cost inflation picked up compared to the previous month due to stock shortages and rising demand, which forced firms to raise their output charges at a record pace. Lastly, business sentiment in the manufacturing sector remained high as firms expected the recovery from the pandemic will continue in the coming twelve months.

Commenting on the reading, Paul Smith, economics director at IHS Markit, noted:

“Whilst optimism about the future remains high and suggests that firms anticipate ongoing gains in the coming months, some concerning developments were signalled by the survey. Indeed, logistical difficulties amongst suppliers led to a noticeable lengthening of lead times and placed a limit on growth during the month. Moreover, the short supply of inputs and unfavourable exchange rate factors drove an eye-wateringly high pace of input cost inflation.”

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