PMI of Services in Brazil Drops to 54.8 in June Amid Cost Pressures

The activity in Brazil’s service sector continued to expand in June, albeit at a slower pace than in May.

According to S&P Global, the Purchasing Managers’ Index (PMI) for the sector decreased from 55.3 to 54.8 over the month.

The composite PMI, which consolidates both industry and services, saw a slight increase, moving from 54.0 in May to 54.1 in June.

The survey highlighted that the pace of new order growth reached its lowest level in five months for both the industrial and service sectors.

S&P Global noted that service companies observed a new increase in sales in the first half of 2024, extending the current expansion streak to nine months.

Despite being lower than in May, the growth rate was notable and remained above its long-term average.

Amid reports of currency weakness, crop losses, and the aftermath of floods in Rio Grande do Sul, input prices continued to rise in June, according to the survey.

The survey identified higher costs for energy, food, fuel, insurance, labor, and water compared to May.

The overall inflation rate was the highest in eight months and exceeded its long-term average.

Pollyanna De Lima, Associate Director at S&P Global, warned that rising input costs in the service sector PMI could challenge Brazil’s economy and concern policymakers.

This comes particularly after the Central Bank halted its easing cycle and kept the benchmark interest rate unchanged at 10.5% during the last Copom meeting in June.

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