PMI of Services in Brazil Drops to 54.8 in June Amid Cost Pressures
Brazil's service sector continued to expand in June, but at a slower pace compared to May, as reported by S&P Global. The Purchasing Managers’ Index (PMI) for the sector decreased from 55.3 in May to 54.8 in June. Despite the slowdown, the composite PMI, which includes both industry and services, saw a slight increase from 54.0 in May to 54.1 in June.
The survey indicated that new order growth reached its lowest level in five months for both the industrial and service sectors. However, service companies noted an increase in sales in the first half of 2024, marking nine consecutive months of expansion. Although the growth rate in June was slower than in May, it remained notable and above the long-term average.
Despite positive trends in order growth and sales, the sector faced significant cost pressures. The survey highlighted increased input prices due to currency weakness, crop losses, and the aftermath of floods in Rio Grande do Sul. Costs for energy, food, fuel, insurance, labor, and water all rose compared to May, resulting in the highest overall inflation rate in eight months, exceeding its long-term average.
Pollyanna De Lima, Associate Director at S&P Global, cautioned that the rising input costs reflected in the service sector PMI could pose challenges for Brazil’s economy and raise concerns for policymakers.
