Brazil Private Sector Returns To Contraction

Brazil’s private sector returned to contraction in June, as the sustained growth in manufacturing failed to offset the second consecutive monthly decline in the dominant services sector, survey data from IHS Markit showed Wednesday.

The seasonally adjusted IHS Markit Brazil PMI Composite Output Index fell to 48.5 from 50.4 in May. A score below 50 suggests contraction in activity.

For the second quarter, the Composite PMI averaged 49.8, its highest quarterly reading since the third quarter of 2014, IHS Markit said.

The IHS Markit Brazil Services PMI Business Activity Index dropped to 47.4 in June from 49.2 in May, amid a renewed decline in new work that led to further fall in employment. Firms were also forced to offer discounts and cut prices to win business despite a sharp increase in their cost burdens.

Activity levels decreased in four out of the six services categories covered by the survey, the exceptions being Financial Intermediation and Post & Telecommunications, the survey said.

Political issues and sluggish market conditions dragged the confidence among services firms to its lowest level since March 2016. In contrast, morale among manufacturers was the strongest since March.

“Unstable market conditions, political issues, fragile demand and financial constraints among consumers impeded new work [in services],” IHS Markit economist Pollyanna De Lima said.

“Manufacturing also faced a host of setbacks, with softer increases in factory orders and production causing an accelerated drop in employment.”

The material has been provided by InstaForex Company – www.instaforex.com

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