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Brazil services growth slows in 16 months, PMI shows

Weak demand put pressure on the Brazilian service sector in September and activity growth slowed again, according to the Purchasing Managers’ Index (PMI) survey, even with lower inflation rates.

Data released this Wednesday (5) by S&P Global show that Brazil’s services PMI fell to 51.9 in September, against 53.9 in the previous month.

The index remained above the 50 mark that separates growth from contraction, but the reading was the weakest in the current 16-month streak of expansion.

“With weaker increases in business activity seen during the third quarter, the average reading for (the period, 53.8) has dropped to the weakest level since the second quarter of 2021,” said Associate Director Economics at S&P Global. Pollyanna DeLima.

According to the survey, the slowdown resulted from contract cancellations, efficiency losses and reduced purchasing power of families.

The increase in demand in September was the smallest since the beginning of the year, with companies indicating that sales were still affected by the uncertainty surrounding the presidential election.

Three of the four service sector segments monitored by the PMI recorded an increase in business activity and sales, but at a slower pace. The only exception was Consumer Services, where reductions were recorded.

The moderation came despite milder increases in input costs and prices charged, respectively at the weakest rates in 25 and 20 months, in the face of tax cuts and lower fuel prices.

Less pressure on spending combined with the entry of new work projects led service providers in Brazil to hire more employees in September, even though the rate of job creation was the weakest in eight months, with sales instability. containing the job.

Business confidence, meanwhile, remained in positive territory, at the third highest level since July 2019.

Service providers generally expect more stable conditions after the presidential election, with some expecting domestic consumption to improve.

Former president Luiz Inácio Lula da Silva (PT) was the most voted in the first round of the presidential election, and will compete in a tense second round with president and reelection candidate Jair Bolsonaro (PL), which surpassed what was estimated by the main polls. opinion.

In September, demand also cooled in the industry, whose growth slowed.

Thus, Brazil’s Composite PMI fell to 51.9 in the month from 53.2 in August, marking the lowest growth in business activity since the beginning of the year.

Source: CNN Brasil

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