BRASILIA, March 4 (Reuters) - Brazil’s dominant services sector expanded at its slowest pace in eight months in February, a survey of purchasing managers’ activity showed on Wednesday, with growth evaporating almost completely in a sharp reversal from the previous month.
The pullback in IHS Markit’s Brazil services purchasing managers index (PMI) weighed on the composite PMI encompassing manufacturing activity, meaning the last time overall activity expanded any slower was also eight months ago.
The services PMI fell to 50.4 in February from 52.7 in January, IHS Markit said, the lowest since June last year, while the composite PMI fell to 50.9 from 52.2.
A reading above 50.0 marks expansion in activity, while a reading below signifies contraction.
The figures back up the view that Latin America’s largest economy is struggling to gain significant traction that would lift it out of the slowest recovery from recession on record, and break a run of three years’ annual growth of barely 1%.
“There was an abrupt reversal of fortune across Brazil’s manufacturing and service sectors, with the former being the key source of growth in February following the opposite in January,” said Pollyanna De Lima, principal economist at IHS Markit.
“Since services is the larger segment in the nation’s economy, where business activity growth softened to an eight-month low, aggregate output expanded at the joint-weakest pace since mid-2019 when a contraction was recorded,” she said.
The fall in the headline services PMI index from January was one of the steepest month-on-month declines since Brazil emerged from recession in 2016.
Among other notable PMI survey findings for February, the composite input prices index jumped to 60.9, the highest since October 2018, as the real’s record low exchange rate to the dollar pushed up manufacturing purchasing costs.
The services sector employment index fell back to 50.4 from 52.4, and the business expectations index slipped to a three-month low of 76.8. (Reporting by Jamie McGeever Editing by Chizu Nomiyama )