Brazil’s PMI index rises to 54.2 in May; best result in 8 months

RIO DE JANEIRO, BRAZIL – Brazil’s Purchasing Managers’ Index (PMI) for industry rose to 54.2 points in May, up from 51.8 points in April, S&P Global reported Wednesday. The highest result in eight months – keeps the indicator above the neutral 50-point mark, which signals an expansion in the sector.

The PMI is one of the most reliable leading indicators for assessing the state of the economy.

According to Pollyanna de Lima, associate director of economics at S&P Global, the growth observed in May was due to an acceleration in the new orders, production and employment indexes.

“A faster decline in the backlog of orders index points to overcapacity among Brazilian manufacturers and underscores the fact that new orders growth continues to lag production,” she wrote.

“However, manufacturers of goods hired more workers in May in anticipation of sales growth. The medium-term outlook is mostly positive, with nearly 71% of manufacturers expecting higher production levels over the next 12 months.”

According to S&P Global, factory orders rose for the third consecutive month, the most since July 2021, and production also increased. With improved sales, production orders, and inventory, Brazilian manufacturers increased their input purchases by the most in eight months.

Meanwhile, the input price index posted a sharp increase, well above its long-term average. The increase was one of the highest in 16 years, adds Pollyanna de Lima. The inflation was due to the lack of balance between supply and demand, fluctuating energy prices, the lockdown in China, and the war between Russia and Ukraine.