New business growth in Brazil service sector hits nine-month high at year-end
Staff Writer |
The Brazilian service sector moved up a gear in December as a marked and accelerated upturn in new work boosted business activity.
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Strengthening domestic demand supported the expansion, while international markets faltered.
Companies were able to back the uptick by leaving their selling prices broadly unchanged in the face of the weakest rise in cost burdens in one year.
At the same time, a robust degree of optimism was sustained.
Latest data nonetheless continued to point to spare capacity among businesses, with a quicker fall in backlogs coinciding with back-to-back declines in payroll numbers.
At 51.9 in December, up from 51.3 in November, the seasonally adjusted IHS Markit Brazil Services Business Activity Index reached a ten-month high.
The latest figure was indicative of a stronger rate of output expansion and contributed to the highest quarterly average since Q4 2013.
Amid reports of improved underlying demand, new client wins and the offering of additional services, sales growth picked up to the quickest since last March.
The rise in new orders was widespread across all five broad areas of the service economy, as was the case for business activity.
Information & Communication led the upturn on both fronts.
December data pointed to a renewed decrease in new work from abroad, after growth had been registered in November for the first time in 44 months.
However, the pace of contraction was only marginal.
Service providers made further inroads into their backlogs.
The reduction in outstanding workloads quickened from mid-quarter and was sharp.
Service sector employment decreased for the second successive month at the end of the year.
Albeit moderate, the pace of job shedding accelerated from November.
Companies continued to report cost-reduction efforts as the key reason for lower staffing levels.
Average input costs rose again during December.
That said, the overall rate of inflation softened to the weakest in 2018.
Slower increases were noted in four out of the five monitored categories, with Finance & Insurance the sole exception.
In turn, selling prices across the service economy rose only marginally, and to the weakest extent in the current sevenmonth period of charge inflation.
Anecdotal evidence suggested that softer increases in expenses and salesboosting initiatives prevented most firms from hiking their fees.
A strong degree of optimism was recorded at the end of the year.
Companies suggested that a change in government, coupled with projects in the pipeline, improved consumer confidence and investment intentions should boost business activity in 2019.
The level of positive sentiment was the thirdhighest registered since September 2017. ■
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