Brazil: Manufacturing PMI hits record high in July
August 3, 2020
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, jumped to 58.2 in July from 51.6 in June, marking the strongest reading since records began in February 2006, amid the continued lifting of coronavirus-induced restrictions. Accordingly, the index remained above the 50-threshold for the second month straight, indicating an improvement in business conditions in the manufacturing sector.
July’s upturn came on the back of strengthening domestic demand amid the reopening of the economy. New orders rose at the fastest clip since January 2010, while manufacturing output increased at the quickest rate on record. Meanwhile, exports sales fell for the eleventh consecutive month amid continued feeble external demand. For its part, employment rose for the first time since February and at the fastest pace since September 2019 as backlogs of work increased.
On the price front, input cost inflation rose at the sharpest pace on record in July on higher metal prices, a stronger U.S. dollar, and supply stock shortages, which also led to output charges to increase at a record pace. Lastly, business sentiment in the manufacturing sector continued to improve, logging the best print in the year so far, as firms projected a recovery of demand and sales in the coming 12 months.
Author: Hanna Andersson, Economist