Financial News: Brazil Manufacturing Growth Improves In June

Brazil Manufacturing Growth Improves In June

07/01/2024 - 10:29:00 (RTTNews)

(RTTNews) - Brazil's factory activity expanded at a slightly faster pace in June, though more growth was curbed by adverse economic conditions along with rising cost pressures as part of currency depreciation, survey data from S&P Global showed on Monday.

The purchasing managers' index, or PMI, for the manufacturing sector rose to 52.5 in June from 52.1 in May. A score above 50 indicates expansion.

A sharper deterioration in suppliers' delivery times, which is inverted before entering the PMI calculation, also boosted the headline figure, the survey said.

Output grew at a moderate pace in June, but this represented an improvement from the flood-related stagnation seen in May. The overall growth was stymied by currency weakness, political issues, and difficult economic conditions.

Similarly, new orders witnessed a weak upturn due to real depreciation against the US dollar and the postponement of orders from clients in the agricultural sector.

Rising price pressures were also a major concern for Brazilian manufacturers. Costs proliferated for a wide range of items, including coffee, cotton, dairy, fabrics, oil, pulp, rice, steel, wheat, and zinc. Moreover, the rate of inflation accelerated to the strongest in nearly two years.

Additional cost burdens forced firms to raise their selling prices to the greatest extent since mid-2022.

Suppliers faced delivery difficulties during June as the floods in the Southern State of Rio Grande do Sul, barriers at customs, and material shortages among distributors caused delays.

Manufacturing employment continued to increase in June, which was more evident in the technology departments. The rate of job creation was marked, but softened to a three-month low.

"Business confidence also ticked higher in June, which could support investment and overall economic growth in the coming months," Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said.

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