Brazil’s manufacturing activity declined to its lowest level in three months during February, amid a sharp slump in demand, survey results from the Markit Economics showed Tuesday.
The purchasing managers’ index for the factory sector dropped to 44.5 from 47.4 in January. A PMI score below 50 suggests contraction in activity.
A further steep decline in new work prompted firms to shed jobs at the second-fastest pace since April 2009, the survey said. A weaker real pushed inputs cost inflation to its highest level since October 2008.
Consequently, firms raised tariffs driving charge inflatio to a survey peak.
However, a weaker real improved demand from abroad, though the increase in orders was modest.
“Brazil’s economic woes continue to weigh on the manufacturing sector,” Markit economist Pollyanna De Lima said.
“Looking ahead, fiscal constraints are likely to bind and GDP is projected to drop again in 2016…Monetary policy is also unlikely to alter the outlook as the Central Bank remains constrained by high inflation.”
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