Brazil: Manufacturing PMI hits new record high in October
November 3, 2020
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, climbed to 66.7 in October from 64.9 in September, marking the best reading since the survey began in February 2006. As a result, the index moved further above the 50-threshold, indicating an improvement in business conditions in the Brazilian manufacturing sector.
October’s upturn was chiefly driven by a pickup in output growth, largely owing to rising new orders both domestically and from abroad amid strengthening demand conditions. New export business rose at the fastest pace on record, while new work intakes also expanded sharply in October. Consequently, employment increased in the period as firms hired extra workers, with the rate of job creation the quickest in survey history. Backlogs of work still rose at a record pace, however, due to shortages of key raw materials.
On the price front, both input costs as well as output charges increased at new record rates in October due to currency weakness against the greenback and raw material shortages. Lastly, business sentiment in the manufacturing sector was sustained in October, with firms remaining optimistic about the outlook for production in the coming twelve months.
Author: Hanna Andersson, Economist