Activity in the Brazilian manufacturing sector generally maintained the pace of growth in July, driven by the production of consumer goods and with good news on the side of inflation and employment, but business lost steam in some areas, partly as a result of shortages of raw material and lower demand.
The Purchasing Managers’ Index (PMI) for the Brazilian manufacturing sector was seasonally adjusted at 54.0 in July, down from 54.1 in June, S&P Global Market Intelligence reported.
Numbers above 50 indicate expansion of activity. According to S&P, the PMI level is consistent with “a solid improvement in the health of the sector”.
Manufacturers suggested that favorable demand conditions supported another increase in new orders in July, when production also increased.
Both, however, lost momentum and had the lowest expansion rates in three months.
According to S&P, reports were that the foreign market weighed on the side of new sales, with international demand for products in decline for the fifth consecutive month and at the fastest speed since the beginning of the year.
Production, on the other hand, was affected by the lack of some inputs and by contained demand for certain goods.
Even so, commodity inflation slowed to the lowest rate in 26 months, while the increase in prices passed on by factories was the lowest in five months, in a context of stagnant input inventories.
“It was particularly welcome to see input cost inflation retreating to a 26-month low, a sign that inflation has likely passed its peak,” said Pollyanna De Lima, associate director of economics at S&P Global Market Intelligence.
Overall, manufacturers are upbeat 12 months ahead, and confidence is at a three-month high, remaining high by historical standards.
This has helped to give new impetus to job creation in the sector, which in July was the strongest since mid-2021.
“July PMI results pointed to robust performance in the manufacturing sector across Brazil. Output growth lost some momentum but remained historically high and the pace of job creation accelerated for the fourth consecutive month as business confidence increased,” said De Lima.
S&P Global Market Intelligence reports services PMI and composite index data for July on Wednesday (3).
Source: CNN Brasil
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