Brazil Manufacturing PMI Falls in January to Lowest Since June -IHS Markit

RIO DE JANEIRO, BRAZIL – The pace of expansion in Brazil’s manufacturing sector decelerated in January for a third month in a row to its slowest since last June, a survey of purchasing managers’ activity showed on Monday, February 1st.

Against a backdrop of a second wave of the COVID-19 pandemic and sticky price pressures, the pace of hiring and growth in new orders cooled markedly, setting the tone for overall activity.

IHS Markit’s headline purchasing managers index (PMI) fell to 56.5 from 61.5 in December. That marked the eighth month of growth, but the slowest since June and the third decline in the index from its record high in October.

A reading above 50.0 marks expansion, while a reading below signifies contraction. The series was launched in 2006.

“While the news that the Brazilian manufacturing sector continued to expand in January is welcome, the fact that growth lost momentum yet again is somewhat concerning,” said Pollyanna De Lima, economics associate director at IHS Markit.

“The key worry is a notable slowdown in growth of new orders, a key leading indicator of future hiring and production,” she said.

Central bank president Roberto Campos Neto said last week that Brazil is facing a potential near-term challenge of sluggish growth and high inflation. Minutes of the bank’s last policy meeting said the economy could even be temporarily thrown into reverse.

IHS Markit’s new orders sub-index fell to 54.8 in January from 63.2 in December, signaling the slowest growth since June. It has now fallen five months in a row from its record high in August.

The employment index slipped, reflecting the slowest pace of hiring since the index first rose back above the 50.0 threshold in July.

The future output index fell from a two-year high marked in December, IHS Markit said.

The input prices index slipped a little, as did the output prices index.