Brazil: Manufacturing PMI rises on surging output in November
Conditions in Brazil’s manufacturing sector improved in November, with the manufacturing Purchasing Managers’ Index (PMI) rising to 52.9 in November from 52.2 in October. Consequently, the PMI climbed higher above the crucial 50-threshold, signaling an expansion in the manufacturing sector.
November’s uptick came on the back of stronger domestic demand which drove robust production growth, with output hitting an over one-and-a-half year high. New export orders, however, fell at the sharpest rate in nearly three years, partly reflecting weakness in the region, particularly in Argentina. Brazilian manufacturers were also more optimistic about the year ahead, citing public reforms, better economic conditions, and investment as upsides to the outlook. On the flipside, job creation remained sluggish, as employment rose only marginally in the month.
On the price front, input cost inflation moderated in November, but remained elevated nonetheless partly due to a depreciating real. Likewise, output charge inflation softened.
Commenting on the recent developments in the manufacturing sector, Pollyanna De Lima, Principal Economist at IHS Markit noted:
“It’s reassuring to see Brazil’s manufacturing industry holding strong in November. […] On the one hand, the PMI results show a further welcoming improvement in the productivity of manufacturers. On the other hand, […] the high unemployment rate across Brazil is seen as one Achilles heel of a sustainable economic recovery as consumers have less money to spend in the domestic market.”