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Manufacturing rebound in Brazil continues, fastest jobs growth since March 2011

Staff Writer | March 7, 2018
Brazilian manufacturers reported a sustained rebound in business conditions during February, helped by a robust and accelerated upturn in new order volumes.
Manufacturing rebound in Brazil
Brazil   IHS Markit Brazil Manufacturing PMI
Greater workloads led to the sharpest rise in production levels for three months and the fastest pace of job creation since March 2011.

Survey respondents mainly cited improved demand for domestic clients, which helped offset a moderate fall in new export sales.

Meanwhile, there were signs that manufacturers continued to pass through some of their higher input costs to customers, with factory gate charges rising to the greatest extent for over a year-and-a-half.

At 53.2 in February, up from 51.2 in January, the seasonally adjusted IHS Markit Brazil Manufacturing Purchasing Managers’ IndexTM (PMI) posted above the neutral 50.0 threshold for the seventh month running.

Moreover, the headline index signalled one of the strongest improvements in operating conditions recorded over the past five years (exceeded only by the PMI reading seen in November 2017).

February data pointed to a robust rise in manufacturing output levels, with the rate of expansion the strongest for three months.

Survey respondents noted that production schedules had been boosted in response to improved new order books and expectations of a sustained upturn in client demand.

The latest increase in total new work was one of the fastest since the start of 2013, which survey respondents attributed to greater sales in domestic markets.

In contrast, export orders dropped for the second month running, although the rate of decline was only modest.

Employment numbers increased across the manufacturing sector at the strongest rate for almost seven years in February.

Anecdotal evidence suggested that stronger business confidence was a key factor helping to support staff hiring plans.

Efforts to boost operating capacity contributed to a further marked decline in incomplete workloads, with the pace of backlog depletion the sharpest since January 2017.

There were signs that improved demand and longer lead-times from suppliers have resulted in reduced caution regarding warehouse inventories.

Reflecting this, stocks of finished goods stabilised in February, while pre-production inventories fell at the slowest pace for three years.

Meanwhile, survey respondents noted that higher steel prices were a key factor placing pressure on cost burdens in February.

The overall rate of input price inflation eased to a four-month low but remained much stronger than seen on average since the survey began in 2006. â–