March 5, 2013 / 12:35 PM / in 5 years

Growth in Brazil services slow in February, PMI shows

* HSBC Brazil Services PMI at 52.1, from 54.5 in January

* Composite PMI drops to 52.9 from 54.9 in January

By Silvio Cascione

SAO PAULO, March 4 (Reuters) - Activity in Brazil’s services sector slowed in February to the weakest pace of growth in four months, underscoring the view of a modest economic recovery this year, a private survey showed.

HSBC’s Purchasing Managers Index (PMI) for the Brazilian services sector dropped to 52.1 in February from 54.5 in January on a seasonally adjusted basis.

Readings above 50.0 indicate expansion and readings below 50.0 signal contraction. Despite being above 50.0 for six straight months, February’s result was the worst since October.

The Composite Output Index, which includes both the services sector and manufacturing data, also fell to 52.9 from 54.9 in February, HSBC said. Brazil manufacturing PMI was released last Friday.

“The PMI suggests that the economy is indeed recovering, but at a cooler pace than the January indicators suggested, which seems more in line with our forecast of a modest recovery in 2013,” said Andre Loes, chief Brazil economist at HSBC.

Brazil’s economy grew only 0.9 percent last year, slowing sharply from a boom in the last decade due to several supply bottlenecks. Analysts expect the economy to grow around 3 percent this year following a barrage of stimulus measures by President Dilma Rousseff, according to a Reuters poll.

The services sector has been one of Brazil’s few growth engines, underpinned by record-low unemployment and robust demand from low to middle-income families.

The HSBC Services PMI survey showed the sixth consecutive monthly increase in the number of new businesses, with most companies expecting a rise in activity in the next 12 months.

However, the report showed job losses for the first time since August, with five of the six sectors surveyed reporting some job cuts, according to HSBC.

Prices charged by services companies rose slightly in February on higher input costs. Services prices have risen more than 8 percent on an annual basis, above the 6.5 percent ceiling of the target range followed by the central bank, according to the benchmark IPCA price index.

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