Brazil’s industrial purchasing managers index (PMI) fell from 54.1 in February to 53.6 in March, S&P Global reported this Monday (1). This kept the indicator in the activity expansion zone, as it remained above 50.0 for the third month in a row. It was also the second highest level since July 2022.
According to the research, the recovery in demand has been essential for improving the health of the industrial sector. New order volume increased for the third consecutive month in March, and at the strongest rate in more than two and a half years.
The recovery was widespread across the three major areas of the industrial sector and led by capital goods. Encouraged by the recovery in the volume of new business, manufacturers in Brazil increased production in March, in the second strongest expansion since mid-2021.
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Pollyanna De Lima, associate director of Economics at S&P Global Market Intelligence, highlighted in a note that the industrial sector performed in the first quarter of 2024 considerably better than that recorded in the fourth quarter of 2023. “In fact, the average PMI analysis it was the highest since the three months to September 2021,” he said.
“Companies’ efforts to rebuild inventories and meet increased customer appetite have prompted job creation and another round of growth in input purchases. Cost pressures remained relatively light and price inflation fell to a three-month low, increasing the likelihood of another cut in the policy rate,” he listed.
However, he said there was a particular vulnerability in external demand, with Brazilian manufacturers again struggling to secure new orders from abroad. “Survey participants cited Asia, Europe and Latin America as the main sources of demand weakness.”
