Services sector in Brazil posts highest growth in 15 years in April; PMI rose to 60.6

RIO DE JANEIRO, BRAZIL – Brazil’s services sector began the second quarter with the highest growth rate in 15 years, thanks to increased demand in the face of reduced restrictions to contain the pandemic and despite record inflation in prices collected in April, according to the Purchasing Managers’ Index (PMI) survey.

Data released Wednesday (4) by S&P Global showed that the services PMI rose to 60.6 in April from 58.1 in March, down only from 60.8 in April 2007, the second month in which the survey was conducted.

The result was boosted by the suspension of Covid-19 restrictions, favorable government actions, and a recovery in demand, according to S&P Global. A score above 50 indicates an expansion in activity.

New orders in the services sector rose at the fastest pace in nearly 15 years in April, with consumer services a particular standout.

The month was marked by a sharp increase in input costs in the services sector, with inflation reaching its second-highest level in the survey’s history, surpassed only by November. Respondents cited the dollar’s strength in addition to higher costs for fuel, raw materials, transportation, and utilities.

This was passed on to consumers, and prices reached all-time highs, particularly in the transportation, information, and communications subsectors.

Still, improving demand conditions, combined with the reemployment of workers laid off during the Covid 19 peak, contributed to job creation in April for the 11th consecutive month and at the most robust pace since June 2007.

“The surge in demand led to the best service provider job creation since mid-2007, which bodes well for the labor market and consumer spending going forward,” said Pollyanna De Lima, associate director of economics at S&P Markit.

Looking ahead, Brazilian service providers were very optimistic, with positive sentiment reaching a seven-month high. Companies anticipate improved economic activity, demand conditions, job creation, and higher investment.

The performance in the services sector contributed to the composite PMI for Brazil, rising from 56.6 in March to 58.5 in April, the highest level since October 2007.

The index rose to 60.6 last month as restrictions to contain the pandemic eased.

According to the Purchasing Managers ‘ Index, Brazil’s services sector began the second quarter with the highest growth rate in 15 years, thanks to increased demand in the face of reduced restrictions to contain the pandemic and despite record inflation in prices collected in April (PMI) survey.

Data released Wednesday (4) by S&P Global showed that the services PMI rose to 60.6 in April from 58.1 in March, down only from 60.8 in April 2007, the second month in which the survey was conducted.

The result was boosted by the suspension of Covid-19 restrictions, favorable government actions, and a recovery in demand, according to S&P Global. A score above 50 indicates an expansion in activity.

New orders in the services sector rose at the fastest pace in nearly 15 years in April, with consumer services a particular standout.

The month was marked by a sharp increase in input costs in the services sector, with inflation reaching its second-highest level in the survey’s history, surpassed only by November. Respondents cited the dollar’s strength in addition to higher costs for fuel, raw materials, transportation, and utilities.

This was passed on to consumers, and prices reached all-time highs, particularly in the transportation, information, and communications subsectors.

Still, improving demand conditions, combined with the reemployment of workers laid off during the Covid 19 peak, contributed to job creation in April for the 11th consecutive month and at the most robust pace since June 2007.

“The surge in demand led to the best service provider job creation since mid-2007, which bodes well for the labor market and consumer spending going forward,” said Pollyanna De Lima, associate director of economics at S&P Markit.

Looking ahead, Brazilian service providers were very optimistic, with positive sentiment reaching a seven-month high. Companies anticipate improved economic activity, demand conditions, job creation, and higher investment.

The performance in the services sector contributed to the composite PMI for Brazil, rising from 56.6 in March to 58.5 in April, the highest level since October 2007.