September 4, 2019 / 1:00 PM / 13 days ago

Brazil services PMI falls to 51.4 in August, composite PMI up - IHS Markit

BRASILIA, Sept 4 (Reuters) - Brazil’s services sector activity expanded in August for the second month in a row, a closely watched purchasing managers index survey showed on Wednesday, although the pace of growth slowed.

The latest IHS Markit PMI for Brazil’s service sector fell to 51.4 from 52.2 in July, still the second consecutive reading above 50.0, which points to at least a consolidation of wider economic growth in the third quarter of the year.

A PMI reading above 50.0 denotes expansion in activity, and a reading below denotes contraction.

Services accounts for more than 70% of all economic activity in Brazil. Following figures this week which showed the fastest pace of manufacturing growth since March, Brazil’s composite PMI rose to 51.9 in August, also the highest since March.

Brazil’s economy grew by 0.4% in the second quarter, a surprisingly strong rebound from the first quarter contraction, meaning a dip back into recession was comfortably avoided. The PMI data for the first two months of the third quarter points to continued growth.

New business orders rose for the second month in a row, but new business orders from abroad fell for the sixth month in a row. IHS Markit said. Since March 2015, new export orders have only risen twice.

But the weakest link in Brazil’s service sector remains employment. While the services employment sub-index broke a five-month run of sub-50 readings in August, it only rose to 50.5, reflecting an extremely sluggish pace of hiring.

The services employment index has only been above 50.0 three times since Brazil emerged from the savage 2015-16 recession. The last time it was above August’s level of 50.5 was four and a half years ago in February 2015, IHS Markit data show. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)

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