February 3, 2020 / 1:03 PM / 15 days ago

Brazil manufacturing PMI rises to 51.0 in January from 50.2 in December - IHS Markit

BRASILIA, Feb 3 (Reuters) - Growth in Brazil’s manufacturing sector picked up in January, a survey of purchasing managers’ activity showed on Monday, with activity starting the year on a stronger footing after growth almost completely evaporated at the end of last year.

The IHS Markit Brazil manufacturing purchasing managers index (PMI) came in at 51.0, signaling the sixth straight month of growth and a rebound from 50.2 the month before, which was the slowest pace of expansion since July.

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

The figures will come as a relief for policymakers and economists alike, who are mostly confident that this is the year the economy finally breaks out from the three years of sluggish growth that followed the 2015-16 recession.

That will need more than a headline manufacturing PMI of 51.0, although the figures released on Monday also suggested firms are optimistic for the year ahead.

“While comfort can be taken from the fact that Brazil’s manufacturing industry remains in expansion mode, the latest PMI results suggest that growth failed to gain meaningful traction,” said Pollyanna De Lima, principal economist at IHS Markit.

“The robust degree of business optimism signaled at the start of 2020 should ensure that both investment and jobs will increase in the near-term, boding well for economic expansion,” she said.

The consensus view among economists and policymakers is that the economy will grow by more than 2.0% this year, with Economy Minister Paulo Guedes saying 2.5% is possible.

The new orders index edged up to 51.0 from 50.2, IHS Markit said, while the employment index rose to 51.2 from 49.3. That may not be a sign of a booming labor market, but it is the index’s highest reading since September. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)

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