BRASILIA, Nov 1 (Reuters) - Brazil’s manufacturing sector expanded at a weaker pace in October from the month before as growth in new orders slowed and job growth stalled, a survey of purchasing managers’ activity showed on Friday, although the outlook remained upbeat.
The IHS Markit Brazil manufacturing purchasing managers index (PMI) dipped to 52.2 from 53.4 in September, the third consecutive month of growth and another sign that the economy continues to recover, if gradually.
A reading above 50.0 marks expansion in the sector, while a reading below signifies contraction. October’s fall to 52.2 was from a seven-month high in September.
While new orders, new export orders and employment were the most notable areas of weakness, sales held up well and inventories fell to their lowest since June last year, a sign that future demand will be met with increased production.
“As long as new business can continue to be generated domestically, goods producers should nevertheless enjoy a merry ending to 2019,” said Pollyanna De Lima, principal economist at IHS Markit.
Among the index’s sub-components, new orders fell to 53.8 from 54.7 and new export orders remained below the 50.0 threshold at 47.9. The employment index fell to 50.1 from 52.9 in September, which was the second highest in nearly nine years.
The output sub-index dipped to 53.8 from 54.7, and the stocks of finished goods index fell to 47.7, the lowest since June last year.
Growth appears to be picking up pace, supported by interest rates being slashed to the lowest on record. The economy grew 0.4% in the second quarter after shrinking 0.2% in the first. According to IHS Markit’s De Lima, the PMIs point to growth in the third quarter of around 0.8%.
Earlier this week, economists at Bank of America Merrill Lynch raised their 2019 and 2020 economic growth forecasts to 1.0% from 0.7%, and to 2.4% from 1.9%, respectively.
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