Brazilian industry starts 2023 in contraction for the 3rd month in a row
Brazil’s industrial activity began in 2023 with a slight improvement in relation to December 2022 but is still in contraction, according to a survey released on Wednesday, February 1, by S&P Global.
The Purchasing Managers’ Index (PMI) survey shows that the Brazilian industry rose to 47.5 in January and 44.2 in December, remaining below the 50 mark that separates growth from contraction.
According to the survey, goods producers revealed that weak demand, rising prices, and fiscal uncertainty affected sales in January.
New orders fell for the fourth month in a row, albeit at the weakest pace since October.
International orders also declined in January due to unfavorable global economic conditions and recession fears, and international sales fell at one of the strongest rates in the survey’s 17-year history.
Weak demand led companies to reduce production volumes amidst cancellations and postponements of existing orders.
On the inflation front, higher prices for food, metals, plastics, and some imported components kept costs rising as the inflation rate accelerated to the highest level for five months.
Some companies tried to pass on cost increases to their customers, but others offered discounts due to weak demand, competitive conditions, and excess inventories.
The low-demand scenario led to further job cuts in the manufacturing sector, but the contraction was marginal and at the weakest pace for three months.
With information from Revista Oeste
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