Brazil: Manufacturing PMI increases in February; conditions continue to deteriorate
The S&P Global Manufacturing Purchasing Managers’ Index (PMI) came in at 49.2 in February, up from January’s 47.5. As such, the index moved closer to, but remained below, the 50.0 no-change threshold, where it has been for the past four months. This signaled a softer deterioration in manufacturing sector operating conditions compared to the previous month.
February’s milder deterioration came on the back of new business declining at the slowest rate in five months; weak demand and client uncertainty continued to weigh on sales. Consequently, output also declined slightly. Exports sales suffered further in February due to the lack of price competitivity of Brazilian goods in international markets. Meanwhile, employment levels fell only marginally.
Turning to prices, input costs rose further in February due to a weaker real and higher raw material costs. That said, input cost inflation was among the softest in over five-and-a-half years. Consequently, output charges rose mildly. Lastly, firms were optimistic that interest rates would be cut to support growth. That said, lack of disposable income and concerns over pricing competitivity restrained sentiment.