Brazil Factory Activity Shrinks Most In 5 Months

(RTTNews) - The Brazilian manufacturing economy deteriorated the most in five months as sales volumes were dampened by competition, demand retrenchment, inflationary pressures, and the war in the Middle East, survey data from S&P Global showed on Monday.

The purchasing managers' index, or PMI, for the manufacturing sector dropped to 47.5 in July from 50.8 in June. Any score below 50 indicates contraction, while a reading above 50 suggests expansion in the sector.

New orders logged the steepest fall in over three years, and export business markedly decreased due to lower sales to China, Europe, and Latin America.

Brazilian manufacturers reduced their workforce numbers for the first time in six months, linked to subdued sales performances and shortages of suitable candidates for existing vacancies.

On the price front, input price inflation eased to a 5-month low, though it remained stronger than the average trend amid higher costs for electronic items, foodstuffs, freight, fuel, chemicals, metals, and plastics. Similarly, selling process inflation remained high despite slowing to a 4-month low.

Supply chain pressures softened in July, and there was the least pronounced deterioration in vendor performance since the start of the year.

Looking ahead, goods producers are optimistic about output expectations over the year ahead amid hopes of better demand and investment trends. After the presidential elections, firms hope to benefit from acquisitions, new product releases, and partnerships.