Brazil manufacturing contracts again in Aug -PMI
SAO PAULO, Sept 2
SAO PAULO, Sept 2 (Reuters) - Brazil's manufacturing activity continued to slow in August as declining orders and rising costs limited a recovery in the country's lagging industrial sector, a closely watched survey showed on Monday.
The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector rose to a seasonally adjusted 49.4 in August from 48.5 in July. However, it remained below the 50 mark separating contraction from expansion for the second straight month.
Brazil's manufacturers have limited a sustained turnaround in the nation's sluggish economy as factories deal with high labor costs, poor infrastructure and a hefty tax burden.
While data last week showed Brazil's economy grew at its fastest in more than three years in the second quarter, manufacturing improved only slightly.
Total new orders shrank for the second straight month, the survey said, with some respondents citing increased competition from Chinese manufacturers.
Brazil's currency, the real, has weakened over 14 percent against the dollar this year, though export orders continued to contract for the fifth straight month. Often, a weaker currency helps boost exports by making locally produced products less expensive on the global market.
The currency drop did, however, contribute to a sharp jump in costs.
"Firms reported that input prices rose at the fastest pace since October 2008, reflecting the impact of the (real's) depreciation," Andre Loes, chief Brazil economist at HSBC, wrote in the report. "Although output prices rose at a slightly slower pace than in July, it was still the second highest monthly rate since October 2008 - highlighting upside risks to inflation."
July's industrial output numbers are scheduled to be released by Brazil's government on Tuesday. (Reporting by Asher Levine; Editing by Chizu Nomiyama)
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