Brazil: Manufacturing PMI plunges in March
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, fell to 48.4 in March from 52.3 in February, marking the sharpest deterioration in operating conditions since February 2017. Consequently, the PMI fell below the 50-threshold signaling an overall worsening in business conditions in the manufacturing sector over the previous month.
The fight to control the Covid-19 pandemic, both globally and domestically, weighed heavily on demand and production in March. New business inflows fell at the steepest rate in over three years, with factory shutdowns and falling customer demand causing clients to cancel orders. Export orders shrank at a marked rate also due to factory closures and delayed projects abroad. Given anemic demand, Covid-19 emergency measures, and concerns over the business outlook, manufacturers reduced production and laid off workers at the strongest rate in over three years.
On the supply-side, ongoing disruptions to global supply chains as a result of the pandemic lead supplier delivery times to lengthen to the greatest extent on record. This resulted in the first rise in manufacturers’ outstanding business since the truck drivers’ protests in June 2018.
On the price front, input cost inflation accelerated sharply in March to the highest level since October 2018, largely due to a stronger U.S. dollar pushing up input prices. In response, good producers raised output prices at the sharpest rate in a year and a half.