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EMBARGOED-Brazil PMIs show economic activity shrinks again in February - IHS Markit

Jamie McGeever
·1 min read

By Jamie McGeever

BRASILIA, March 3 (Reuters) - Private sector business activity in Brazil shrank in February for the second month in a row, a purchasing managers' survey showed on Wednesday, as the COVID-19 second wave triggered another decline in new orders and employment.

Like January, the contraction in activity was led by the dominant services sector, which shrank for the second time since August although at a slower pace, according to IHS Markit's latest PMI survey.

The headline Brazil services PMI was 47.1 in February compared with 47.0 in January, while the composite PMI including manufacturing rose to 49.6 from 48.9.

A PMI reading above 50.0 signals expansion, and a reading below shows contraction.

"The service sector endured another setback in February. With the COVID-19 pandemic discouraging bookings for a second straight month, business activity continued to contract," said Pollyanna De Lima, economics associate director at IHS Markit.

"However, the downturn was cushioned by a strong expansion in manufacturing production. The growth momentum gained in manufacturing also helped to curb the contractions in aggregate new orders and employment," De Lima added.

The services employment index rose to 48.5 from 48.2 from 49.3, marking the third month of job losses. That pulled the composite employment index across manufacturing and services up to 49.7 from 48.9, IHS Markit said.

Only once in the past year - November, 2020 - has the services employment index been above 50.0.

Inflationary pressures in the services sector were the strongest in almost five and a half years, IHS Markit said, as the prices charged index rose to its highest since October 2015. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)