New business growth in Brazil hits six-year peak at start of 2019
Staff Writer |
Brazil's service sector took a further step forward in January.
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Companies experienced the fastest increase in new business for six years and raised output to the greatest extent in 11 months.
While the domestic market was supportive of the uptick, there was a solid and quicker reduction in new business from abroad.
As for the labour market, there was a third successive contraction in employment, though job shedding softened to a marginal pace.
Business sentiment, meanwhile, strengthened to a three-month high.
Despite rising only marginally, from 51.9 in December to 52.0 in January, the seasonally adjusted IHS Markit Brazil Services Business Activity Index highlighted the strongest increase in output for nearly a year.
Economic stability, improved domestic bookings and a favourable political scenario were among the factors cited for the uptick in activity.
Information & Communication posted the quickest expansion in business activity of all monitored sectors, with only Transport & Storage noting a contraction.
New business expanded for the fourth time in a row, and to the greatest extent in six years.
The rise in new work was broad-based across all five tracked categories and led by Finance & Insurance.
Underlying data indicated that total sales growth was driven by the domestic market, as exports fell for the second straight month and at a sharper pace than in December.
Brazilian service providers were strongly upbeat towards the 12-month outlook for activity, with the level of positive sentiment strengthening to a three-month high and surpassing its long-run average.
According to panellists, better economic conditions, new partnerships, the change in government and forecasts of further improvements in demand underpinned optimism.
Amid reports of higher prices paid for energy, fuel, meat, vegetables and rental equipment, service providers' expenses continued to rise at the start of the year.
However, the overall increase was the slowest in four years.
Ongoing cost-reduction initiatives curbed inflation, according to survey members.
One way in which firms lowered their expenses was via their headcounts.
Service sector employment decreased for the third successive month in January, though at the slowest rate in this sequence.
Nonetheless, companies were able to make further inroads into their backlogs.
Outstanding business decreased for the forty-second straight month in January, albeit to the least extent since mid-2018.
Output charges increased in January at the same fractional rate that was seen in December.
Some companies revised their fees upwards amid the pass on of greater cost burdens to clients.
However, a number of panellists reportedly kept their charges unchanged due to successful cost reductions, a relatively stronger domestic currency and sales drives.