In January, Brazil experienced a fast-paced expansion in its factory activity, the quickest seen in the past one-and-a-half years, as revealed by survey data from S&P Global. This upturn was mainly driven by a resurgence in new orders.
The Purchasing Managers' Index (PMI) for manufacturing inched up to 52.8 in January as juxtaposed to 48.4 in November. A reading over 50 represents sector expansion, and anything below signifies contraction.
For the first time in five months, there was a rise in new orders this January. This surge, the fastest in eighteen months, was largely due to improved market share conditions domestically.
Owing to this, firms considerably scaled up production volumes; the most significant rise seen since the middle of 2022. In terms of pricing, changes were seen with input cost inflation slackening to the weakest rates in almost a decade, despite challenges in supply chains. This is partly attributed to issues in the Red Sea region. The prices at the factory gate saw a minor increase as a result.
Red Sea tensions and delayed imports from China are reported to have caused the worst delivery hold-ups since August 2022.
However, January also marked a period of strengthening job creation along with a growth in input purchasing. On the brighter side, manufacturers expressed their optimism about production prospects as the sentiment reached a three-year high.
