BRASILIA, Nov 5 (Reuters) - Brazil’s services sector expanded in October at the fastest rate since January, a purchasing managers’ survey showed on Thursday, which helped drive the strongest private sector growth in Latin America’s largest economy in over a decade.
The rise in IHS Markit’s Brazil services purchasing managers index (PMI) shows the sector finally recovering from the worst of the coronavirus-fueled economic slump earlier this year, but it continued to shed jobs and high input costs curbed companies’ pricing power.
IHS Markit’s headline Brazil services PMI rose to 52.3 from 50.4 in September, the second consecutive reading above 50.0. Services account for around 70% of all economic activity in Brazil.
A reading above 50.0 marks expansion, while a reading below signifies contraction.
The rise in services followed another new high in the manufacturing PMI. The composite PMI encompassing both sectors rose to 55.9 in October from 53.6 in September, IHS Markit said, the highest since February, 2010.
“The services PMI survey point(s) to an economy on the mend, with activity rising for the second straight month following COVID-19 induced contractions from March through to August,” said Pollyanna De Lima, economics associate director at IHS Markit.
“Companies observed a pick-up in demand for their services, which they attributed to a relaxation of COVID-19 restrictions, the reopening of some businesses, increased local tourism and improved client confidence,” she said.
Within services, the business expectations index rose to 71.0 from 69.7, the highest since February.
The input prices index rose to 63.0 from 62.2, the highest in four years, while the employment index edged up to 47.5 from 45.4, indicating the seventh consecutive month of job cuts although the least drastic in that period.
The aggregate employment index comprising services and manufacturing rose to 50.0, right on the cusp of outright expansion and the highest since February, IHS Markit said. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)
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