Brazil’s Manufacturing Sector Surges in February Amid Strong Domestic Demand

Brazil’s manufacturing industry gained momentum in February, according to S&P Global’s Purchasing Managers’ Index (PMI). The index rose to 53.0 from 50.7 in January, marking its highest level since September 2024.

This jump reflects the strongest expansion in five months, driven by increased domestic demand and rising new orders. The PMI, which measures industry health, highlights a return to growth after months of sluggish performance.

Manufacturers reported a robust rise in sales, the most significant since April 2024. They attributed this to improved market conditions and stronger consumer demand.

However, export orders declined for the fourth consecutive month, with weaker demand from Argentina, the United Kingdom, and the United States. Despite this challenge, businesses expressed optimism about future production, with confidence reaching a six-month high.

The recovery also spurred job creation. Companies hired at the fastest pace since May 2024, reflecting expectations of sustained growth. Rising employment underscores manufacturers’ positive outlook despite lingering challenges in global trade.

Cost pressures eased slightly compared to January but remained elevated. Companies cited currency weakness and higher prices for freight, fuel, polyester, resin, and steel as key factors. These cost increases forced manufacturers to raise selling prices to their highest levels in six months.

Brazil’s industrial sector plays a vital role in its economy, contributing 22.3% of GDP and employing one-fifth of the workforce. However, industrial output remains below pre-pandemic levels, still 2.6% lower than February 2020 and 19% below its May 2011 peak.

The rise in February’s PMI signals short-term recovery but highlights persistent challenges like global demand weakness and input cost inflation. Manufacturers must navigate these hurdles while capitalizing on domestic demand growth to sustain momentum into 2025.

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.