Services employment in Brazil rises for first time since February 2015
Staff Writer |
Brazilian service providers experienced a pick-up in new work during October, which led to a renewed upturn in business activity and the first expansion in jobs in over three-and-a-half years.
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At the same time, business sentiment improved to its highest level since October 2013.
Regarding price indicators, a sharp and accelerated rise in input costs was recorded, while charge inflation moderated on the back of some firms’ efforts to keep customers and maintain a competitive edge.
At 50.5 in October (September: 46.4), the seasonally adjusted IHS Markit Brazil Services Business Activity Index posted in expansion territory for the first time in three months.
The latest figure was, however, indicative of a marginal pace of growth.
Output rose at Information & Communication and Finance & Insurance companies, while further reductions were evident in the remaining three categories.
The renewed rise in services activity, coupled with a sustained increase of manufacturing production, resulted in a return to growth of private sector output.
The Brazil Composite PMI Output Index edged up from 47.3 in September to 50.5 in October, a level consistent with a marginal rate of expansion.
Leading services activity to increase was a return to growth of new work, following contraction at the end of the third quarter.
Service providers registered a modest rise in sales, although one that was the fastest since July and above the long-run survey average.
Anecdotal evidence highlighted improved underlying demand and successful marketing efforts.
Order book volumes at manufacturers expanded at a slight pace that was weaker than seen in the service sector.
October data continued to signal spare capacity among services companies, as outstanding workloads decreased further.
The fall in backlogs was the thirty-ninth in as many months and the most pronounced in the survey history.
Similarly, goods producers noted a marked decline in workin-hand, albeit one that was the weakest in the current four-month period of depletion.
The completion of outstanding business at service providers was aided by a renewed increase in employment.
Firms posted job creation for the first time in 44 months, but the pace of growth was marginal overall and curtailed by cost-reduction initiatives at some companies.
Likewise, manufacturing jobs rose, with growth at a sevenmonth high.
Encouragingly, business sentiment among services firms remained positive in October, with close to 74% of panellists upbeat towards the prospects for activity in the coming 12 months.
Boosting confidence was the end of the elections and an associated reduction in political uncertainty.
Optimism climbed to a five-year peak.
Sentiment stayed elevated at goods producers, despite waning to a three-month low.
Services costs rose again, which firms linked to volatility in financial markets, unfavourable exchange rates, collective bargaining and higher fuel prices.
The rate of inflation was sharp overall and picked up to the quickest in three months.
A softer, albeit historically elevated, rise in purchasing prices was registered in the manufacturing industry.
Services providers raised their selling prices for the fifth month running in October.
In contrast to the trend for input costs, the upturn in charges was modest and softened to the weakest in the current period of increases.
Curbing inflation were competitive conditions and efforts to retain current customers.
Factory gate charges likewise increased at a slower pace, one that was the slowest in six months. ■