Brazil services sector grows at fastest pace in 5 months-PMI

Wed Dec 5, 2012 7:12am EST

Related Topics

* HSBC Brazil Services PMI rises to 52.5 from 50.4

* Composite PMI increases to 53.0 from 50.7

* Job creation grows at fastest pace since June

By Silvio Cascione

SAO PAULO, Dec 5 (Reuters) - Activity in Brazil's services sector grew in November at the fastest pace in five months, a private survey showed on Wednesday, adding to signs of a gradual recovery in Latin America's largest economy.

HSBC's Purchasing Managers Index (PMI) for the Brazilian services sector rose to 52.5 in November from 50.4 in October on a seasonally adjusted basis. It was the third straight month the index stood above the 50 mark that divides expansion from contraction.

The Composite Output Index accelerated to 53.0 from 50.7 in October, HSBC said. The composite index includes both the services sector and manufacturing data, which had been released on Monday.

"This is more evidence that the recovery of economic activity is finally materializing," said Andre Loes, chief Brazil economist at HSBC.

The services sector, supported by the rise of around 30 million people in to the middle class over the past decade, used to be one of Brazil's main growth engines.

But it disappointed in the third quarter due to weaker activity in the financial sector.

Brazil, once a magnet for global investors looking for unique opportunities, has been mired in a period of slow growth after years of low investments and currency gains.

Despite President Dilma Rousseff's efforts to revive the economy, with measures including 10 interest rate cuts and a slew of tax reductions, gross domestic product grew just 0.6 percent last quarter, frustrating analysts who expected a faster recovery.

The PMI report showed the third straight month of job creation in the services sector in November. Job creation in the sector grew at the fastest pace since June.

Optimism over the outlook for the next 12 months also remained high, despite a minor decline from October, added Markit, which compiled the data for HSBC.

"Services firms accelerated the pace of hiring in response to stronger demand, reflecting the strong confidence of the sector," said HSBC economist Loes.

Input costs gained at the fastest pace in three months, but remained below their historical average. The stronger pace of input prices growth was recorded in the so-called post and telecommunication sector.

However, just a small part of the rising costs was passed on to clients, with prices charged by companies increasing at the slowest pace since January. A wide majority of firms, 93 percent, reported no change in their prices.

Companies also reported a small decline in backlogs of work in November compared to October.

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Comments (1)
JimONeill wrote:
For most of my life, Brazil was always the “next great country” that never was. Now, it appears that this saying is coming true. The Middle Class is growing and the lower class is getting smaller. I just hope that Brazil can stay away from becoming a major military power and wasting its wealth on intervening in other countries. South America does not need a super power.

Dec 05, 2012 7:56am EST  --  Report as abuse
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