S&P Global reported Monday that Brazil’s services PMI fell to 53.9 in August from 55.8 in July, marking the 15th consecutive month above the 50 mark that separates expansion from contraction. However, the rate was the weakest since early 2022.
More subdued demand for a range of services led to the slowdown, although the sector still saw increased sales, production, and hiring in August.
“Some companies (observed) weaker customer demand for their services, due in part to pre-election uncertainty,” said Pollyanna De Lima, associate director of economics at S&P Global Market Intelligence.
The increase in new business was the weakest since January. While some companies reported robust demand, effective marketing, and improved conditions in other sectors of the economy, others pointed to declining consumer demand due to uncertainty surrounding the election.
Survey respondents again reported higher food, input, labor, and utility costs, but lower fuel taxes limited input inflation, which fell to its lowest level in 22 months.
This encouraged discounting, and the final goods price index rose at its slowest pace in six months, according to S&P Global.
In turn, expectations improved significantly during the month, reaching their highest level in nearly nine years. Capital spending, corporate campaigns, and forecasts of more stable economic conditions bolstered the optimistic projections.
In addition, “predictions that political concerns will ease after the presidential elections in October have led service companies to consider this slowdown as temporary,” De Lima added.
Brazil’s composite PMI fell to 53.2 from 55.3 in July, showing the slowest increase in economic activity since the beginning of the year.