Brazil manufacturing sector recovery extends into February-PMI

Fri Mar 1, 2013 8:00am EST

Related Topics

* HSBC PMI at 52.5 in February, fifth straight monthly expansion

* Slips from 22-month high of 53.2 in January

* Survey suggests recovery continuing

By Asher Levine

SAO PAULO, March 1 (Reuters) - Brazil's manufacturing output expanded for the fifth straight month in February, a survey showed on Friday, offering hope that the weakest sector of Brazil's economy may be slowly getting back on to its feet.

The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector fell to a seasonally adjusted 52.5 in February from a 22-month high of 53.2 in January. Still, the index stood above the 50 mark that divides expansion from contraction, where it has remained since October.

The survey gauge for manufacturing output rose for the sixth straight month in February, with factories reporting strong new business inflows and a slight increase in new export orders, which rose for the third straight month.

With stronger activity leading to higher work backlogs, factories hired more workers for the second straight month following a nine-month decline, the survey said.

The data suggests Brazilian industry may be recovering following a three-year period of mediocre growth due to weak global demand and structural challenges such as low productivity, high taxes, infrastructure bottlenecks and a tight labor market.

Industrial output dropped 2.7 percent in 2012 from 2011, according to government data released last month, though many economists see an improvement in manufacturing over the course of 2013 as Brazil's economy begins to gain steam.

Data released earlier on Friday showed Brazil's economy expanded 0.6 percent in the fourth quarter after a downwardly revised 0.4 percent in the third quarter. A weekly central bank poll of analysts showed the economy is expected to grow 3.1 percent in 2013.

"The PMI reinforces the perception that manufacturing activity in the first quarter of 2013 is firmer than that seen in the second semester of 2012, in line with our expectation of a modest recovery of the economy as a whole," said Andre Loes, chief Brazil economist at HSBC.

January's indsutrial output data is expected to be released on March 7.

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