Business conditions in Brazil’s manufacturing industry deteriorated in January, as has been the case throughout the past two years.
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The downturn was seen across the board, with order books, output, new export orders, buying levels, stocks and backlogs down in the consumer, intermediate and investment goods categories.
Meanwhile, inflationary pressures intensified.
At a seven-month low of 44.0 in January, down from 45.2 in December, the seasonally adjusted Markit Brazil Manufacturing Purchasing Managers’ Index (PMITM) pointed to a sharper deterioration in the health of the sector.
New orders dipped at the quickest pace since last May, amid reports of weaker underlying demand and the ongoing economic crisis.
Subsequently, manufacturers scaled down production for the twenty-fourth month running in January, with the rate of reduction the fastest since May 2016.
As was the case for order books, the sharpest drop in output was noted in the consumer goods category.
New export orders continued to fall in the opening month of 2017.
Reductions were evident in each of the three broad areas of manufacturing, with the sharpest contraction recorded at capital goods producers.
Fewer output requirements combined with ongoing efforts to reduce costs led manufacturers to shed jobs again in January.
Despite easing since December, the rate of job losses remained steep.
The quickest drop in payroll numbers was registered in the investment goods category.
Cashflow issues and lower workloads reportedly led to a decline in buying levels at the beginning of the first quarter.
Furthermore, the rate of contraction was among the fastest since the global financial crisis.
Subsequently, stocks of purchases decreased again, with around 24% of panellists noting lower holdings of raw materials and semi-finished goods.
Post-production inventories also fell in January, and at the quickest pace in the survey’s 11-year history.
January data pointed to an increasing degree of spare capacity among manufacturers in Brazil, with backlogs of work falling at the fastest rate in six months. ■