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Manufacturing in Brazil remains in growth territory in April

Staff Writer | May 4, 2018
April data showed a further improvement in the health of the Brazilian manufacturing industry as gains in new work ensured that businesses continued to scale up production and create jobs.
Manufacturing in Brazil
Brazil   IHS Markit Brazil Manufacturing PMI
However, as widespread as was the nature of the expansion so was the slowdown.

Softer rates of increase were noted for new orders, output, exports, buying levels and employment.

Regarding price measures, trends varied.

Input cost inflation climbed to a four-month high, while factory gate charges rose at the weakest pace since last October.

By registering 52.3 in April, the seasonally adjusted IHS Markit Brazil Manufacturing Purchasing Managers’ IndexTM (PMI) showed the ninth consecutive improvement in operating conditions across the sector.

That said, down from 53.4 in March, the headline figure was at a three-month low and highlighted a loss of growth momentum.

New orders, the largest sub-component of the PMI, increased at the weakest pace since January.

Anecdotal evidence suggested that the sustained upturn in sales reflected product diversification and improved demand, but that growth was curbed by challenging market conditions and elevated unemployment.

The rise in total sales was supported by improved demand from external markets.

Indeed April saw a back-to-back upturn in new export orders, with real depreciation reportedly aiding the expansion.

On the flip side of currency weakness was a pickup in cost inflationary pressures, as imported materials became dearer to Brazilian manufacturers.

Moreover, in the domestic market, there were mentions of higher energy and insurance bills.

The increase in input prices was the most marked in four months.

Conversely, the rate of charge inflation softened to the weakest since last October, as decisions among some firms to pass-through to customers greater cost burdens were partly offset by discounts offered elsewhere due to competitive pressures.

Quantities of purchases increased solidly, although to a lesser extent than noted in March.

Concurrently, raw material shortages at suppliers led to delivery delays and, subsequently, a further decline in input stocks.

Encouragingly, Brazilian manufacturers increased output for the fourteenth month in a row in April.

Despite being solid, the pace of expansion eased to the weakest since last October.

Some of these products were placed into inventories, as highlighted by the first rise in stocks of finished goods for nearly three-and-a-half years.

Looking ahead, goods producers were strongly optimistic that output will expand over the course of the coming 12 months.

Underpinning positive sentiment were hopes of political stability, investment plans and export opportunities. â–