Brazil services activity falls amid renewed decline in new work
Staff Writer |
The Brazilian service sector returned to contraction in October, with companies reporting lower business activity and new work following expansions in the preceding survey period.
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The subdued demand environment led to another monthly decline in payroll numbers, with a further drop in backlogs highlighting ongoing spare capacity among firms.
Input prices continued to rise sharply, while charges were lowered in line with efforts to boost sales.
At the same time, lingering political issues weighed on confidence, with optimism at a three-month low and well below the series average.
Falling from 50.7 in September to 48.8 in October, the headline seasonally adjusted IHS Markit Brazil Services PMI Business Activity Index pointed to a renewed contraction in output.
The drop reportedly reflected subdued consumer confidence amid political and economic uncertainties.
Although factory production rose further, the upturn was insufficient to offset the reduction in services activity and private sector output fell.
The seasonally adjusted IHS Markit Brazil PMI Composite Output Index was down from 51.1 in September to 49.5 in October.
New business at services firms decreased for the first time in four months, which panel members attributed to a competitive environment as well as weak demand from both the public and private sectors.
However, as was the case for output, the rate of contraction in new work was slight.
In contrast, goods producers saw an eighth successive monthly rise in order book volumes.
The drop in inflows of new orders at service providers occurred despite another monthly decline in selling prices.
Supported by falling interest rates and staff costs, businesses attempted to stimulate demand by way of charging less for their services.
The decrease in output prices was the third in as many months, though only slight.
Conversely, factory gate charges rose further, with inflation at a seven-month high.
Input costs facing services companies continued to rise, which panel members linked to higher prices paid for fuel, energy, paper, steel and food.
The rate of cost inflation remained elevated in the context of historical survey data.
Purchasing prices at manufacturers also increased at a robust pace.
Attempts to curb operating expenses, alongside subdued demand conditions, led some services companies to lower payroll numbers in October.
Employment was down for the thirty-second month in succession.
Buoyed by sustained increases in new work, factories created jobs for the first time in over two-and-a-half years. ■