Services growth in Brazil stabilizes in December, shows PMI

The service sector in Brazil ended 2021 with growth stabilization amid a weaker pace of expansion in new orders in December compared to the previous month, according to the Purchasing Managers Index (PMI) survey. in English) released this Wednesday.

IHS Markit reported that its Brazil services PMI stood at 53.6 in December, equaling the November mark, but “with companies ending 2021 in a much better way than they started as vaccine progress and vaccine decline pandemic sustained continued recoveries in sales and production.”

Thus, the indicator closes the year above the 50 mark, which separates growth from contraction, with respondents citing the return of in-person events and the release of some pent-up demand with the relaxation of restrictions against Covid-19.

But despite the advance in vaccination, the growth in the volume of new orders took place at a slower pace than in November. The increase in total sales was highlighted by the international demand, which grew for the first time in four months.

The increase in new business guaranteed the hiring of new employees in December, but the rate was the slowest since August.

The end of 2021 also registered a further increase in expenses, with a sharp rise in input costs, but at the weakest pace in five months. Higher prices were reported for a number of items, as well as energy and fuel, in part due to the weakness of the real and shortages of materials among suppliers.

The rate of charge price inflation also reached its weakest level in five months, but remained above the long-term average, with cost increases being passed on to customers.

Regarding the next 12 months, the expectations for the activity remained positive in December, but also fell in relation to November. The optimism was supported by marketing initiatives and vaccination advancement.

“The expectations were based in large part on the hope that the pandemic would continue to decline and that immunization coverage would improve. Companies are also anticipating recovery in the economy in general, including the automotive and construction sectors,” said Pollyanna De Lima, associate director of economics at IHS Markit.

However, she cautioned that there could be many difficulties this year, such as the risk of new Covid-19 waves, interest rate hikes, persistent inflation, lingering supply chain problems and disruptions from the presidential election.

With the weakening of the industrial sector in December offsetting the expansion in services, the growth of the Brazilian private sector stabilized in December, with the Composite PMI at 52.0 in December, also unchanged from the previous month.