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Brazil PMI May 2020

Brazil: Manufacturing PMI rose from record low in May

The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, rose to 38.3 in May from 36.0 in April, which had marked the lowest reading since the survey began in February 2006. Nevertheless, the PMI remained entrenched below the 50-threshold for the third month straight, signaling a severe deterioration in business conditions in the manufacturing sector.

The coronavirus pandemic and its associated containment measures continued to hammer the Brazilian manufacturing sector in May, as production and new orders contracted, albeit a more modest rate compared to the previous month. Consequently, in a bid to control costs, firms cut purchasing activity at the quickest rate on record and increased job shedding.

On the supply-side, Covid-19 induced shutdowns and logistical restrictions led to the second-greatest supplier delivery delays in the survey’s history.

Meanwhile, business sentiment in the manufacturing sector improved in May as firms expressed some optimism for a potential recover once the pandemic has been brought under control.

On the price front, input cost inflation accelerated chiefly due to a stronger U.S. dollar, which forced manufacturers to raise output charges markedly despite collapsed demand and increasing competition.

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