* HSBC Services PMI rises to 51.3 from 50.3 in March
* Inflation keeps profit margins under pressure
* Composite PMI at 51.5 in April, up from 51.0
By Silvio Cascione
SAO PAULO, May 3 Growth in Brazil's service
sector accelerated slightly in April after a surprise slowdown
in the previous month, according to data released on Monday,
stoking hopes of a gradual recovery in Latin America's largest
HSBC's Purchasing Managers Index for the Brazilian services
sector rose to 51.3 in April from 50.3 in March on a seasonally
adjusted basis, signaling activity at service
providers expanded at a slightly faster pace than in the
previous month. Readings above 50.0 indicate expansion.
"Following the very weak increase in activity reported by
firms in March, the April results seem more consistent with the
modest recovery we believe the Brazilian economy is
experiencing," said Andre Loes, chief Brazil economist at HSBC.
But the results "are not sufficient to put concerns about
downside risks to growth at rest," he added.
Brazil's economy is expected to grow 3.0 percent this year,
according to the median forecast of economists in a weekly
central bank poll. While that rate would be three times faster
than last year's meager 0.9 percent growth rate, it would be far
from the eye-popping expansion rates that lured in foreign
investors last decade.
Inflation, which has haunted President Dilma Rousseff's
government and prompted the central bank to raise interest rates
from a record low, also weighed on services providers. Companies
reported shrinking margins due to a solid rise in input costs
and only a slight increase in average selling prices.
"Monitored firms indicated that raw material and labor costs
had increased in price, but that competition for new contracts
had prevented them from fully passing on to clients the
increased cost burden," research firm Markit, which compiled the
survey for HSBC, said in a report.
Four of the six categories in the PMI survey posted growth
in April from the previous month, led by financial
intermediation. Post and telecommunications and other services
showed a decline in output, HSBC said.
Staffing levels among service providers also increased for a
second straight month, though confidence over prospects for the
next 12 months weakened to the lowest level since January.
HSBC said its Composite Output Index for
Brazil, which includes both the services sector and
manufacturing data, rose to 51.5 from 51.0 in March. The HSBC
manufacturing PMI for Brazil, released on Thursday,
showed Brazilian manufacturing expanding at the slowest pace in
In recent years, the rapid growth in Brazil's services
sector has contributed to record-low unemployment rates, which
has had profound implications on one of the world's most unequal
societies. In Brazil, more than 30 million people were lifted
out of poverty in the past decade.