Brazil services PMI rises to 10-month high in January - IHS Markit

BRASILIA, Feb 5 (Reuters) - Brazil’s services sector in January grew at its fastest pace in 10 months, a purchasing managers survey showed on Wednesday, lifting growth in overall activity across Latin America’s largest economy to a four-month high.

The IHS Markit Brazil services purchasing managers index (PMI) rose to 52.7 from 51.0 in December, the highest since last March, while the composite PMI encompassing manufacturing rose to 52.2 from 50.9, the highest since September.

A reading above 50.0 marks expansion in activity, while a reading below signifies contraction.

The services PMI of 52.7 matched the readings of March last year and February 2018. The last time it was higher than that was September 2012, IHS Markit figures show.

Among the most notable drivers of the services sector expansion was the sixth consecutive month of job growth. The employment subindex’s reading of 52.4 was the third highest since 2012.

“PMI data for the Brazilian service sector showed a welcome uptick in growth at the start of 2020 as job creation and lower interest rates boosted consumption,” said Pollyanna De Lima, principal economist at IHS Markit and author of the report.

“Service sector employment and business activity expanded at quicker rates, as firms were strongly confident about growth prospects. Companies hope that fiscal reforms will attract investments, improve economic growth and further support demand.”

On the other hand, new export business shrank again, with that index falling to 47.7 from 50.9, suggesting December’s rise was a flash in the pan and further evidence that the real’s slide to a record low against the dollar is failing to boost exports.

This fits with figures on Monday that showed Brazil posted its first January trade deficit in five years, due largely to a 20% fall in exports.

Brazil’s economy, dominated by services, is expected to grow by more than 2% this year, according to official and private sector forecasts, boosted by strengthening domestic demand and the lowest interest rates on record. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)