The S&P Global Brazil Manufacturing Purchasing Managers’ Index dropped to 50.3 in April from 51.8 in March 2025.
This latest reading marks the lowest level since December 2023 and hovers dangerously close to the 50-point threshold that separates growth from contraction.
Manufacturing activity has reached its weakest level in nearly a year and a half amid growing concerns over U.S. tariff policies. April witnessed the first decline in new orders to Brazilian industry in 16 months.
The contraction remained marginal but signals a significant shift in market dynamics. Manufacturers reported weakened demand in both domestic and international markets during the month.
Many attributed reduced sales to increased final goods prices and persistent market uncertainty. Export sales declined for the fifth time in six months, with evidence pointing to falling demand from Mercosur countries and the United States.
This downturn coincides directly with President Trump’s April 2nd announcement of “reciprocal” tariffs. The measures imposed a 10% duty on Brazilian exports to the U.S. market while some countries face higher rates up to 34%.
Brazil’s Manufacturing Sector Faces Mounting Pressures
Industrial production still increased for the third consecutive month but at the smallest rate during this period. Order cancellations, declining sales, and skilled labor shortages constrained production growth across sectors.
Capital goods manufacturers sustained growth while consumer goods and intermediate goods producers experienced contractions. Business confidence regarding future output fell to its lowest level in five years.
The manufacturing sector faces multiple challenges beyond tariffs, including high borrowing costs and political uncertainties. Employment growth weakened to a four-month low due to cost-cutting measures and reduced order volumes.
Despite overall cost inflation declining to an 11-month low, it remained substantial. Companies reported price increases for bearings, freight, natural gas, and steel.
The inflation of prices charged by manufacturers also retreated to its lowest level since March 2024. Some firms passed additional costs to customers while others offered discounts to stimulate sales.
Brazilian manufacturers now struggle to navigate U.S. tariff impacts while managing domestic economic pressures. These combined factors create significant headwinds for industrial recovery in the months ahead.