SAO PAULO Oct 1 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
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.