Services in Brazil grow in November, but input costs weigh, indicates PMI

Brazil’s services activity grew in November for the sixth month in a row as demand strengthened, although it slowed amid a record rate of input inflation, the Purchasing Managers Index (PMI) showed. ).

The services PMI released on Friday by IHS Markit fell to 53.6 in November, from 54.9 in October, to the lowest level in the current six-month straight expansion period. Still, the index remained well above the 50 mark, which separates growth from contraction.

The sector’s performance was based on the resumption of sales growth, with the volume of new orders increasing at the fastest pace since March 2019.

This was possible with the reduction of Covid-19 cases in Brazil and greater access to the vaccine, which increased market confidence and demand in November, highlighted IHS Markit.

On the other hand, international demand for Brazilian services worsened, with the sub-index of export orders falling at the fastest rate since March.

Service providers managed to get new jobs despite the sharp increase in prices charged, at a pace only surpassed by those observed in the previous two months.

This is because the rising costs continued to be passed on to customers – the survey registered the largest increase in inputs in the month since the start of data collection, in March 2007.

Higher prices were cited for items such as beverages, food, fuel, transport and public services, as well as the devaluation of the real and the water crisis.

“It is worrying that input price inflation has hit a new record, a factor that could dampen the recovery in coming months as additional costs continue to affect final charges,” said IHS Markit Associate Director of Economics, Pollyanna From Lima.

But the increase in demand has encouraged Brazilian service providers to hire employees. The hiring growth rate was the strongest since mid-2008.

Confidence also increased in November, on expectations that the pandemic will continue to weaken as access to vaccines improves. The level of optimism was the second most robust since the start of the Covid-19 pandemic.

In contrast to the growth in services, Brazilian industrial activity contracted for the first time in a year and a half in November, which brought the expansion of the private sector as a whole to a minimum in six months. The Composite PMI fell to 52.0 in November from 53.4 the previous month.