Brazil PMIs show fastest service sector growth since 2013 – IHS Markit

RIO DE JANEIRO, BRAZIL – Private sector business activity in Brazil roared back to life in June, a purchasing managers’ survey showed on Monday, July 5, driven by the fastest pace of growth in the dominant services sector in more than eight years.

Services sector new business orders, new exports, and employment led to indicating that Latin America’s largest economy is set for solid growth in the second half of the year.

IHS Markit’s headline Brazil services PMI jumped to 53.9 from 48.3 in May, the fastest expansion since January 2013. This helped pull the composite PMI, including manufacturing, up to 54.6 in June from 49.2, the highest since October.

A PMI reading above 50.0 signals expansion, and a reading below shows contraction. Services account for around 70% of all economic activity in Brazil.

According to survey participants, the upturn stemmed from easing some Covid-19 restrictions, vaccine progress, and new business growth.

“Services firms posted the sharpest monthly rise in business activity for nearly eight and a half years, and there was a renewed upturn in employment as many companies sought to replace workers that had been dismissed earlier in the year,” said Pollyanna De Lima, economics associate director at IHS Markit.

The services employment index rose to 52.0 from 48.9, the highest since January last year. The composite employment index across manufacturing and services rose to 52.9 from 49.9, the highest since February 2012.

The services new business orders index rose, but inflationary pressures also rose. The prices charged index reached the third-highest reading since data collection started in March 2007, IHS Markit said.