May 2, 2019 / 1:47 PM / 3 months ago

UPDATE 1-Brazil manufacturing grows at slowest pace in 6 months

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By Jamie McGeever

BRASILIA, May 2 (Reuters) - Growth in Brazilian manufacturing activity slowed in April to its weakest pace in six months, data on Thursday showed, with the IHS Markit Brazil manufacturing purchasing managers index falling to 51.5 from 52.8 the month before.

The figures are the latest to show that Latin America’s largest economy continues to struggle to gain any real traction, an indication that the second quarter will not be much better than the first.

A reading above 50.0 marks expansion in the sector, while a reading below signifies contraction. While the sector grew for a 10th straight month, sales grew at the slowest rate since July and export orders fell for the fifth month in a row.

“Faltering new order growth and lingering trade challenges created headwinds for Brazilian manufacturers at the start of the second quarter,” said Pollyanna De Lima, principal economist at IHS Markit.

“These setbacks hindered the ability of firms to sustain the solid increases in employment signaled at the start of the year. The latest upturn in jobs was marginal at best, having eased to the weakest in 2019 so far,” she said.

Manufacturing represents only around 15 percent of Brazil’s annual economic output.

Currency weakness failed to boost export demand in April, but did spur the fastest rate of input price inflation in six months, IHS Markit noted. The real currency has been hovering around 4.00 per dollar for weeks, and analysts have been paring back forecasts of how much they think it will rise this year.

Still, Brazilian manufacturers are optimistic that product innovation, a recovery in exports and improved economic conditions will spur a rebound in activity. The degree of optimism was the second highest in the series history, IHS Markit said. ($1 = 3.9650) (Reporting by Jamie McGeever Editing by Chizu Nomiyama and Jonathan Oatis)

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