Brazil’s industrial expansion loses momentum in April, but hires increase

RIO DE JANEIRO, BRAZIL – Brazilian industry started the second quarter losing steam, still negatively impacted by restrictions due to the Covid-19 pandemic, although it has registered employment growth, according to the Purchasing Managers’ Index (PMI) survey.

Data released on Monday by IHS Markit showed that the Brazilian manufacturing PMI fell to 52.3 in April, from 52.8 in March, but still above the 50 mark that separates growth from contraction.

Despite the loss of momentum, employment in the industrial sector increased in the month as some companies sought to replace employees laid off because of the pandemic. Others hired because they anticipate better economic conditions in the medium term.

“Although the PMI results for April show further contractions in orders and output in Brazil, reduction rates were weaker than in March. In addition, companies hired employees and were more optimistic about the scenario,” pointed out IHS Markit’s associate director Pollyanna De Lima.

April registered the second consecutive decline in new orders, although the contraction rate was weaker than in March. The survey indicates that this was due to Covid-19 restrictions and company closures, affecting demand.

The strengthening of international demand for goods for the third consecutive month was not enough to offset the decline in overall orders, and companies reduced output during April, albeit marginally.

Producers also refrained from increasing input purchases last month amid reports of rising prices and weak demand. Thus, buying activity was largely stagnant in April after expanding for 9 straight months.

The shortage of raw materials and the weakness of the real against the dollar pushed up input prices, the inflation rate of which was the strongest since September 2020.

As a result, companies raised their selling prices at the third strongest pace since data began to be collected 15 years ago.

Nevertheless, optimism increased in April and was above the long-term average, with business owners expecting capacity expansion, investments, new partnerships, advertising, and greater availability of Covid-19 vaccines.

Source: Moneytimes

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