Brazil’s Service Sector Faces Third Straight Month of Decline

Brazil’s services sector shrank for the third month in a row in June 2025, according to S&P Global. The Services PMI fell to 49.3, down from 49.6 in May. A PMI below 50 means the sector is getting smaller.

The combined index for services and manufacturing also dropped to 48.7, its lowest since January. Manufacturing alone fell to 48.3, the weakest since July 2023. Business leaders say high interest rates, now at 15 percent, make borrowing expensive.

This hurts both companies and consumers. Fewer people are buying services, and new business orders keep falling. Companies also face high costs for things like labor, fuel, and materials. Because demand is weak, most cannot raise their prices much.

Political uncertainty ahead of the 2026 presidential election makes businesses cautious. Many hesitate to invest or hire new workers. The second quarter of 2025 has been the weakest for Brazil’s private sector since early 2021.

The services sector employs over 70 percent of Brazil’s workforce, so its slowdown affects millions of jobs. High interest rates aim to control inflation but also make credit less affordable.

This slows spending and investment. The current data show Brazil’s businesses face real challenges: high costs, weak demand, and an uncertain future. These trends matter because they threaten jobs, incomes, and the country’s economic growth.

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