Brazil manufacturing output stable in Sept -PMI

SAO PAULO Tue Oct 1, 2013 9:00am EDT

Related Topics

SAO PAULO Oct 1 (Reuters) - Brazil's manufacturing activity remained nearly stable in September as output recovered from two months of declines, though rising costs continued to drag on the country's lagging industrial sector, a closely watched survey showed on Tuesday.

The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector rose to a seasonally adjusted 49.9 in September from 49.4 in August. However, it remained below the 50 mark separating contraction from expansion for the third 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.

Output expanded for the first month in three, though only slightly, the survey said, with an increase in consumer and capital goods production offsetting a decline in intermediate goods.

Total new orders shrank for the third straight month, with some respondents citing economic instability, deteriorating client confidence and increased competition from abroad.

Brazil's currency, the real, has weakened over 8 percent against the U.S. dollar this year, though export orders continued to contract for the sixth straight month. Often a weaker currency helps boost exports by making locally produced products less expensive on the global market.

The weakening currency led to a sharp rise in input prices, however, which resulted in higher output prices, further sapping competitiveness. Seasonally adjusted input prices accelerated at their fastest pace since October 2008 while output prices picked up pace from the previous month, "reinforcing an upside inflation risk," Andre Loes, chief Brazil economist at HSBC, wrote in the report.

Inflation in Brazil will remain stubbornly high well into 2015 even as the economy struggles to gain steam, the central bank said on Monday.

August's industrial output numbers are scheduled to be released by Brazil's government on Wednesday.

Output probably edged up slightly in August after a sharp decline in the previous month, helped by stronger car and steel production, a Reuters poll showed on Monday.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.