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Brazil manufacturing PMI rises to 5-month high in July, IHS Markit says

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By Jamie McGeever

BRASILIA, Aug 2 (Reuters) - Growth in Brazil's manufacturing sector picked up in July to its fastest rate in five months, a survey of purchasing managers' activity showed on Monday, led by the strongest new orders this year and a record rate of input buying across the sector.

Employment growth slowed, however, and input prices dipped to their lowest in a year although they remained strong by historical standards, IHS Markit data showed.

IHS Markit's headline purchasing managers index (PMI) rose to 56.7 in July from 56.4 in June, the highest level since February. A reading above 50.0 marks expansion, while a reading below signifies contraction. The series was launched in 2006.

"Manufacturers enjoyed a robust rise in sales during July, which supported a quicker upturn in production. What's more, demand strength and belief that (this) trend will be sustained encouraged firms to size up their inventories," said Polyanna de Lima, economics associate director at IHS Markit.

"Several companies indicated the scaling up of input purchasing to safeguard against stock shortages, but there remained concerns about difficulties in sourcing items such as chemicals, electronic components, metals, plastics and textile," she said.

According to IHS Markit, Brazilian manufacturers ramped up the pace of input and materials purchases in July to the fastest since the data series began in February, 2006.

Expectations of strong demand and growing COVID-19 vaccine coverage point to an encouraging outlook for the second half of the year, IHS Markit said.

Brazil's Economy Ministry recently raised its 2021 economic growth forecast to 5.3% from 3.5%, and the central bank expects the industrial sector to expand by 6.6%. (Reporting by Jamie McGeever Editing by Paul Simao)