Services moderate in August, price pressure eases, PMI shows

The growth of services activity in Brazil showed moderation in August, but even so, business expectations reached a maximum in almost nine years, according to the Purchasing Managers Index (PMI) survey, still pointing to the cooling of pressures. inflationary.

S&P Global reported on Monday (5) that its Brazil services PMI fell to 53.9 in August from 55.8 in July, the 15th straight month above the 50 mark that separates expansion from contraction.

However, the rate was the weakest since early 2022.

More subdued demand for a range of services led to the slowdown, although the sector still recorded increases in sales, production and hiring in August.

“Some companies (noticed) weaker customer demand for their services, in part caused by uncertainty around the elections,” explained Pollyanna De Lima, associate director of economics at S&P Global Market Intelligence.

The increase in new business was the weakest since January.

While some companies reported demand resilience, effective marketing and improving conditions in other economic sectors, others cited falling consumer demand amid uncertainty ahead of the elections.

Survey participants again reported higher costs for food, inputs, labor and utilities, but lower fuel taxes curbed input inflation, which fell to its lowest levels in 22 months.

That favored the offer of discounts, and the final goods price index rose at the slowest pace in six months, according to S&P Global.

In turn, expectations improved considerably over the month, reaching the highest level in almost nine years.

Investments, commercial campaigns and forecasts of more stable economic conditions supported optimistic forecasts.

In addition, “forecasts that political concerns will subside after the October presidential election have led utilities to assess this slowdown as temporary,” added De Lima.

However, with August also marked by a loss of strength in the industry, Brazil’s Composite PMI fell to 53.2 from 55.3 in July, showing that business activity recorded the slowest pace of increase since the beginning of the year.