Brazil manufacturing barely expands in June - PMI

Mon Jul 1, 2013 9:00am EDT

Related Topics

* HSBC PMI unchanged at 50.4 in June

* Sector ends weakest quarter since Q3 2012

* Input costs rise at fastest pace since May 2011

SAO PAULO, July 1 (Reuters) - Brazil's manufacturing activity grew very slowly in June, signalling a tentative recovery in the beleaguered sector lost steam as rising prices hurt demand.

The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector stood at a seasonally adjusted 50.4 in June, unchanged from May and still at its lowest since October. Readings above the 50 mark indicate growth.

Last month's lacklustre performance sent the quarterly average to 50.5, the weakest since 2012's third quarter, said Andre Loes, chief Brazil economist at HSBC.

"After beginning the year on a relatively strong note, economic activity in the manufacturing sector lost momentum," said Loes. "New order growth eased further, showing no signs of a rebound in the coming months. There was also bad news on the inflation front, with prices climbing at faster rates in June."

Weak industrial output has held Brazil's economy back in the past few years. Manufacturers have struggled with weak global demand and structural challenges such as low productivity, high taxes, infrastructure bottlenecks and a tight labor market.

Brazil's economy grew just 0.6 percent in the first quarter , frustrating expectations for a stronger rebound after several stimulus measures by President Dilma Rousseff's government and the central bank.

The survey also gave further evidence of rising inflation, which has forced policymakers to raise interest rates from record lows in recent months. Input costs in the manufacturing sector increased at the quickest pace since May 2011, while prices charged by factories rose the most since March 2011.

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