BRASILIA (Reuters) – The pace of expansion in Brazil’s manufacturing sector picked up again in February after three months of deceleration, a survey of purchasing managers’ activity showed on Monday, driven by strong increases in new orders and production.
Employment also picked up as firms looked to meet rising demand, while supply constraints pushed price pressures back up again, IHS Markit’s latest monthly purchasing managers index (PMI) report showed.
IHS Markit’s headline manufacturing PMI rose to 58.4 in February from 56.5 in January, marking the ninth consecutive month of growth.
A reading above 50.0 marks expansion, while a reading below signifies contraction. The series was launched in 2006.
“The manufacturing sector in Brazil has regained momentum after a stuttering start to 2021, but the speed of recovery remains slower than in the second half of last year,” said Tim Moore, economics director at IHS Markit.
“Improving conditions were driven by a strong rise in new order volumes, especially from domestic clients. Goods producers sought to ramp up production schedules and staff numbers in response to greater demand, but supply constraints acted as a brake on growth,” he said.
IHS Markit’s new orders sub-index rose to 56.0 from 54.8 in January, the first rise in six months, while the employment index rose to 53.8 from 51.2.
The future output index rose, IHS Markit said, and the output prices index rose to a three-month high.
A growing number of economists say Brazil’s economy will shrink in the first quarter, dragged down by a second wave of COVID-19 and the end of emergency cash transfers to millions of poor people on Dec. 31.
Inflation remains sticky too, presenting a further headache for consumers, businesses and policymakers.
(Reporting by Jamie McGeever)