By Jamie McGeever
BRASILIA (Reuters) – Brazilian manufacturing expanded at a record pace in August, a survey of purchasing managers’ activity showed on Tuesday, extending its solid recovery from the COVID-19 crisis as new orders rose to new peaks and employment hit a 10-year high.
IHS Markit’s headline Brazil manufacturing purchasing managers index (PMI) jumped to 64.7 in August from the previous all-time high of 58.2 in July, the highest level since the index was first compiled in February 2006.
A reading above 50.0 marks expansion in the sector, while a reading below signifies contraction.
This is the latest piece of evidence to show a widening chasm between manufacturing and industry, which are rebounding strongly from the crisis, and the dominant services sector, which is still contracting and shedding jobs.
Economic forecasts have been revised up recently, in large part due to the strong rebound in manufacturing. The consensus among economists is now closer to a 5.5% fall in gross domestic product this year compared with around -7% a few months ago.
“Growth rates in production and new orders hit their highest ever levels and helped to drive an unprecedented rise in purchasing activity. Job hiring subsequently took off, with growth in employment the best in over a decade,” said Paul Smith, economics director at IHS Markit.
Among the notable sub-index PMI readings for August, output jumped to 68.0 from 62.9, and new orders rose to 70.8 from 60.5, both comfortably the highest ever.
The employment index rose to 56.3 from 52.3, the highest since February, 2010.
But Smith also noted the “eye-wateringly high” inflationary pressures in August due to supply constraints a persistently weak exchange rate. The input prices index jumped to 86.7 from 75.8, the highest since the series began in 2006.
(Reporting by Jamie McGeever; Editing by Chizu Nomiyama)
