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Services activity continues to fall sharply in Brazil

Staff Writer |
The downturn in Brazil’s service sector was maintained in November. Activity decreased sharply, reflecting an overall drop in new business inflows.

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Backlogs of work fell at the quickest rate in the survey history, while employment was down again.

Input costs rose sharply, but efforts to attract new work led firms to lower selling prices further. Meanwhile, companies’ expectations regarding the year-ahead outlook for activity remained positive, although the degree of optimism fell to a threemonth low.

At 44.4 in November, the seasonally adjusted Services Business Activity Index recorded in contraction territory for the twenty-first straight month. Despite rising from 43.9 in October, the latest reading still pointed to a sharp rate of reduction.

Output fell in five of the six monitored sub-sectors, the exception being Hotels & Restaurants. Whereas manufacturing remained in contraction, the drop in output was only mild and much softer than seen in services.

The seasonally adjusted Markit Brazil Composite Output Index rose from 44.9 in October to 45.3 in November, highlighting a sharp, but weaker, reduction in private sector activity.

After having increased slightly in October, the level of new business placed with service providers in Brazil decreased in November. Panellists commented that demand conditions remained fragile.

Nevertheless, the rate of contraction was marginal overall as declines in the Transport & Storage and ‘Other Services’ sub-sectors were partly offset by growth in Financial Intermediation, Hotels & Restaurants, Post & Telecommunication and Renting & Business Activities.

By comparison, manufacturers saw a moderate fall in order books.

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