Brazil’s industry boom loses steam in August, but price pressures ease, PMI shows

Newly produced cars in factory parking lot in São Bernardo do Campo, SP

by Camila Moreira

SAO PAULO (Reuters) – The expansion of Brazilian industrial activity slowed in August on the weakest pace in six months of new orders and production, according to a Purchasing Managers Index (PMI) survey, which showed still retreating price pressures.

The industry PMI released on Thursday by S&P Global fell to 51.9 in August from 54.0 in July, the weakest level since April (51.8). It was the index’s third straight decline, but it still remains above the 50 mark that separates growth from contraction.

The largest sub-component of the PMI, the new orders index rose in August at the weakest pace in the current six-month run of expansion, amid more moderate purchases by customers, challenging economic conditions and weak retail sales.

Likewise, production rose only slightly in August, and at the weakest pace in six months. Respondents cited improved capacity, greater availability of inputs and higher sales, but at the same time recorded weak demand for a range of goods.

Even with moderate demand, some producers raised sales prices again in August, transferring costs to customers. However, as the proportion of those who did so was smaller, there was a sharp deceleration in the inflation rate, to a 28-month low.

Inflation pressure also showed relief due to weaker increases in input costs, which rose at the weakest rate in more than two and a half years. According to survey participants, higher prices for various materials were partially offset by certain commodities, particularly steel and copper.

“The easing of inflationary pressures, as commodity prices showed a lower trend, fuel rates were cut and aggressive monetary tightening continued, was the main positive (point) seen in the August PMI result,” highlighted the statement. S&P Markit associate director of economics, Pollyanna De Lima.

August also saw relief from pressure on supply chains, as delivery times declined to the lowest level since early 2020, with reduced delays along with weak global demand for inputs and better availability of some items.

Given the projections of sales acceleration, the sector’s confidence for the next 12 months reached the strongest level since the end of 2020, which supported the creation of jobs in the Brazilian industry in August, although the growth rate has retreated. for a minimum of four months.

The article is in Portuguese

Tags: Brazils industry boom loses steam August price pressures ease PMI shows

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