Brazil’s factory activity contracted at a slower pace in September as output and new orders fell at softer rates and inflationary pressures moderated, survey data from Markit Economics showed Thursday.
The purchasing managers’ index for the Brazilian manufacturing sector rose to 47 from 45.8 in August. The sector contracted for the eighth month in a row as a PMI reading below 50 suggests decline in activity.
The headline index averaged 46.7 in the third quarter, up slightly from 46.1 in the previous three months.
Production declined sharply, even though the pace eased from the previous month. The biggest fall was logged in the intermediate goods production.
New orders dropped for the eighth month running, and sharply, mainly due to weaker demand conditions amid challenging economic situation. Domestic market was the main source of weakness, while foreign orders were stable after five months of declines.
Input cost inflation slowed from August and was slightly below its long-run average. A weaker real kept costs higher. Manufacturers passed on the cost burden to clients by raising output prices for the twelfth successive month, albeit at a slower pace compared to August.
Manufacturers continued to shed jobs with layoffs being linked to cost-cutting efforts. However, the rate of reduction dropped from July’s 73-month record to a moderate level.
“The outlook still looks cloudy as underlying domestic issues suggest the country’s economy won’t be turning a corner in the near future. Workforce numbers have been trimmed in each month since March, with job shedding in September easing slightly from August’s six-year peak,” Pollyanna De Lima, economist at Markit, said.
The material has been provided by InstaForex Company – www.instaforex.com