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Brazil PMI September 2023

Brazil: Services sector conditions deteriorate at steepest pace in over two years in September

The S&P Global Services Purchasing Managers’ Index (PMI) dropped to a 28-month low of 48.7 in September from August’s 50.6. As such, the index fell below the 50.0 no-change threshold, signaling the steepest deterioration in services sector operating conditions compared to the prior month since May 2021.

September’s downturn was largely due to new business contracting for the first time since February amid reduced private-sector investment and weaker demand. In addition, firms reduced staff levels in light of softer demand, with employment decreasing for the first time in seven months.

Turning to prices, higher fuel prices led to yet another increase in operating expenses, although cost inflation still softened from the prior month. That said, most businesses kept selling charges unchanged: Charge inflation was the second-lowest since November 2020. Lastly, firms’ sentiment regarding output expectations for the year ahead eased from August, reportedly due to concerns regarding government policies. That said, lower interest rates and expectations of improving demand underpinned optimism among businesses.

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