Brazil industry bounces back in October - PMI

Thu Nov 1, 2012 7:59am EDT

Related Topics

* HSBC Manufacturing PMI rises to 50.2 from 49.8 in Sept

* Factories report best month since March

* New orders rise, but survey points to job losses

By Silvio Cascione

SAO PAULO, Nov 1 (Reuters) - Brazil's manufacturing sector expanded in October for the first time since March, a private survey showed on Thursday, suggesting a modest turnaround in local industry after a weak performance in September.

The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector rose to 50.2 in October from 49.8 in September. It was the first time since March the index rose above the 50 mark that divides expansion from contraction.

Government data earlier on Thursday showed industrial production slipped 1.0 percent from the previous month after an increase of 1.5 percent in August.

The government's industrial production statistics include the manufacturing, mining and oil sectors. Nevertheless, the slim rise in the PMI index for October's fueled hopes that factories kicked off the last quarter on a stronger footing.

"The October manufacturing PMI report provides further evidence that the rebound is gaining traction, even if the overall pace of growth remains modest," said Andre Loes, chief economist in Brazil at HSBC.

New orders also rose for the first time since March but export orders dropped for the 19th month in a row, due mostly to weak demand from European clients in particular.

According to the survey, nearly 17 percent of the firms noted a rise in new orders, while 13 percent noted a drop.

Feeble global demand has been one of the main drags on Brazil's manufacturing sector in the past few years.

Manufacturers also reduced their stocks of finished goods for the 14th consecutive month, even though by a small margin.

Job losses were reported for the seventh month in a row, but only around 5 percent of companies reduced their staffing levels, said Markit, who conducted the PMI survey for HSBC.

Input prices rose in October, the survey added, as companies reported unfavorable exchange rates and higher petrochemical prices. Some businesses also linked rising purchase costs to a recent drought in the United States.

The survey also highlighted Brazil's inadequate highway conditions, which helped lengthen suppliers' delivery times for the tenth month in a row. A few companies also complained about delays in the delivery of imported goods, Markit added.

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