Brazil is one of only three nations monitored by the Global Business Outlook surveys to see an improvement in sentiment during October, with levels of confidence towards output, profitability and employment the highest worldwide.
Under such upbeat growth projections, companies have revised higher their spending plans for capital (capex) as well as research and development.
At the same time, firms foresee stronger rates of inflation for staff and non-staff costs.
Rising from +47% in June to +55% in October, the business activity net balance highlights a strong degree of confidence towards the 12-month outlook for output.
Moreover, the latest reading is broadly in line with the average over the ten-year survey history and contrasts with fading optimism in nine of the 12 nations for which comparable data are available.
Brazilian manufacturing firms are more buoyant than their services counterparts, albeit sentiment is higher in both sectors when compared to mid-year.
The main reasons boosting optimism among private sector companies are hopes of better economic conditions, investment, financial stability, expanded market shares, partnerships, lower interest rates, tourism, product diversification and favourable public policies.
Brazil business activity expectations Still, some companies see client default, dollar appreciation, US-China trade dispute, weakness in Argentina, competitive pressures, high unemployment, environmental problems and political troubles as threats to the business outlook.
In line with predictions of better economic conditions in the coming 12 months, Brazilian private sector companies intend to hire additional staff in the year ahead.
Moreover, the employment net balance is up from June’s one-year low of +23% to +29% in October.
Sub-sector data indicate that goods producers are more likely to take on additional workers than service providers.
Capital spending plans have been revised higher in both the manufacturing and service sectors.
The aggregate net balance for capex is in fact the jointhighest globally, matching that recorded in Russia.
October also sees an improvement in overall confidence for R&D.
On this front, Brazil is placed third in the rankings, behind Ireland and Russia respectively.
In the manufacturing industry, research and development optimism is the joint-strongest in over eight-and-a-half years. ■