Brazil’s Industrial Purchasing Managers’ Index (PMI) dropped to 54.1 points in June, after 54.2 in May, S&P Global announced this Friday (1st).
The result keeps the indicator above the neutral level of 50 points, which signals expansion in the sector.
The average in the second quarter was 53.4 points, above the 49.9 recorded in the period from January to March.
According to the associate director of economics at S&P Global, Pollyanna de Lima, the performance in June was positive, despite the slight drop in the margin.
She underscores the sector’s strength even against a backdrop of high inflation, aggressive interest rate hikes, cost-of-living crisis, supply chain bottlenecks and war in Ukraine.
“The domestic market provided the main impetus for the steady growth of factory orders, which in turn supported job creation and increased production volumes,” it says in a note.
“Companies also continued to purchase additional inputs amid a considerable delay between the purchase and actual procurement of raw materials.”
According to S&P Global, factory orders increased for the fourth consecutive month, albeit at a slower pace than in May, due to lower global demand and inflationary pressures.
Demand conditions, however, recorded a continuous improvement and led the employment rate to its fourth consecutive increase, being the strongest since October 2021. In June, 49% of monitored companies reported an increase in input costs.
The inflation rate remained at a high level, but decelerated from the previous month.
“The sharp pressures on prices and the increasing interest rate reduced the confidence of companies, as they evaluated the negative impacts on consumption and investment”, adds Pollyanna de Lima.
“Still, manufacturers expect the favorable domestic demand environment to be maintained, which should support production growth in the coming year, in conjunction with capacity expansion efforts, technological advances, efficiencies and new product launches. ”
Source: CNN Brasil
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