Brazil: Manufacturing PMI returns to expansion in June
July 1, 2020
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, increased to 51.6 in June from 38.3 in May. Thus, the PMI climbed above the 50-threshold for the first time since February, signaling an improvement in business conditions in the manufacturing sector.
Lifting of coronavirus-related restrictions and social-distancing measures were largely behind this month’s upturn. Both production and new orders returned to expansion as firms resumed activity and demand firmed up. However, export sales continued to shrink, indicating that the improvement was domestic led. Moreover, although output and new work rebounded, businesses continued to shed jobs and cut purchasing activity in a bid to lower costs, yet at a slower pace compared to May. On the price front, input cost inflation rose at the sharpest pace in nearly two years largely due to a stronger U.S. dollar, which also forced manufacturers to raise output charges at the fastest rate since September 2018. Lastly, business sentiment in the manufacturing sector improved to the highest level since February amid more optimistic projections for demand and sales in the year ahead.
Author: Hanna Andersson, Economist