Brazil PMI April 2016


Brazil: Manufacturing PMI plunges to lowest level in over seven years

May 2, 2016

The Markit manufacturing Purchasing Managers’ Index (PMI) plummeted in April, reversing all of the ground gained in March. The index decreased from March’s 46.0 to 42.6—the worst result in over seven years. The PMI remains far below the 50-threshold that separates contraction from expansion in business conditions in the manufacturing sector amid a deep recession in the Brazilian economy.

According to Markit, April’s deterioration came on the back of the largest contraction in output since November. Moreover, the ongoing economic recession led manufacturers to shed jobs at the fastest rate in survey history and the depressed domestic economy caused a sharp drop in new business orders. However, new orders from abroad were a bright spot in the survey and rose at the fastest pace on record, likely due to the depreciated value of the real. While the weak value of the currency is supporting exports, it is driving up import costs for raw materials and average purchase prices rose at the fastest pace since July 2008. Commenting on the result, Markit analysts added that. “there is little sign so far of a rebound as the economy remains in a fragile state and the political paralysis looks set to persist. […] Manufacturers braced themselves for tougher times and shed jobs at the fastest pace in the history of the survey, with many indicating that costs had to be slashed if they wanted to stay in business.”

Author: Angela Bouzanis, Lead Economist

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Brazil PMI Chart

Brazil PMI April 2016

Note: Markit HSBC Brazil Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: HSBC and Markit.

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