Brazil manufacturing activity expands slightly in December -PMI
* HSBC Brazil Manufacturing PMI rises to 50.5 from 49.7
* Consumer goods output rises, capital goods drop
By Asher Levine
SAO PAULO, Jan 2 (Reuters) - Brazil's manufacturing activity rose slightly in December as the volume of new orders increased for the first month in six, a private survey showed on Thursday.
The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector rose to a seasonally adjusted 50.5 in December from 49.7 in November. The 50 mark separates contraction from expansion.
Output expanded for the fourth straight month, the survey showed, mostly due to new contract wins. Consumer goods posted an improvement in new orders and output, though the capital goods segment declined as orders fell.
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 firms surveyed reported strengthening demand, they noted that economic uncertainty has weighed on client confidence.
"Economic activity in the manufacturing sector expanded on the back of stronger production growth," said Andre Loes, chief Brazil economist at HSBC. "Companies also reported less pressure on both input costs and prices charged."
Input prices continued to expand, but at their slowest pace since May, while output prices expanded at the slowest rate since July 2012. Still, manufacturers reported that a weaker currency continued to add to the cost of raw materials.
Brazil's currency, the real, has weakened about 12 percent against the U.S. dollar this year, but export orders have remained nearly stagnant. Often a weaker currency helps boost exports by making locally made products less expensive on the global market, though survey respondents pointed to lower demand from abroad as well as increased competition.
Stocks of finished goods decreased for the ninth straight month, though only marginally, as firms attempted to meet orders from inventory in order to free up working capital.
Brazilian factories also cut jobs for a ninth straight month as intermediate and capital goods producers reduced payrolls, according to the report.
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