Brazil private sector four months in expansionStaff writer ▼ |
The latest rise in business activity was broad-based, with both manufacturers and service providers recording growth. December data highlighted a modest increase in business activity in the Brazilian service sector, extending the current period of expansion to four months.
Down from 52.3 to 51.7 in the latest month, the headline seasonally adjusted Services Business Activity Index eased from November's ten-month high to signal a slower and modest growth rate. Nonetheless, the index average for Q4 (52.1) was above that seen in the third quarter of 2013 (50.2).
For the second month running, all six broad areas of the service economy posted higher business activity in December, while new order growth was recorded in four categories. In both cases, Financial Intermediation registered the strongest rate of increase.
The overall expansion of service sector output largely reflected a further rise in incoming new business. Despite increasing for the sixteenth consecutive month, the rate of growth eased to a slight pace that was the weakest since September. Companies noting an expansion of new orders mostly pointed to improved underlying demand, although there were again some reports of economic uncertainty.
New business growth across the private sector as a whole was unchanged from the slight pace seen in November and manufacturing new orders rose for the first time in six months. The outlook for business activity in the year ahead remained positive in December.
The degree of sentiment weakened to the lowest in seven months, however. All six broad areas of the service economy anticipate output growth in the next 12 months, with survey respondents linking confidence to expectations of an improvement in the wider economy and the football World Cup.
There were, however, some mentions of competitive pressures and political uncertainty arising from the 2014 presidential elections. Improved business conditions resulted in further services employment growth in the latest survey period. However, the rate of expansion eased further from October's 16-month peak and was slight overall.
Conversely, manufacturing employment fell in December and workforce numbers across the private sector as a whole rose at the weakest pace in the current four-month sequence of job creation. Prices charged by private sector firms rose further during December. However, the overall increase in output prices was only moderate and eased to the weakest in eight months.
In the service economy, the strongest rise was by far noted at Hotels & Restaurants firms, with the rate of inflation accelerating to the sharpest in almost four years. Input price inflation in the private sector also eased, but was nonetheless robust. ■