Brazil PMIs point to fourth-quarter growth moderating from strong third-quarter

BRASILIA (Reuters) - Brazilian services sector activity in November grew at its slowest pace in five months, a purchasing managers index survey showed on Wednesday, meaning overall business activity in Latin America’s largest economy was unchanged from the month before.

FILE PHOTO: A woman walks on the beach as the sun sets between buildings in Recife June 10, 2014. REUTERS/Brian Snyder/File Photo

Brazil’s service sector PMI fell to 50.9 last month, according to IHS Markit’s latest survey, the lowest since June, and the composite PMI including services and manufacturing activity was steady at 51.8.

A PMI reading above 50.0 denotes expansion in activity, and a reading below denotes contraction. Services accounts for more than 70% of all economic activity in Brazil.

With the composite PMI unchanged from October, these numbers suggest Brazil’s economy may not be accelerating quite as fast as economists expected or as other data indicated it might be.

Pollyanna De Lima, principal economist at IHS Markit, said there were “notable discrepancies at the sector level”, with “marked and accelerated” growth in factory orders and production, and “marginal and slower rates of increase” in services activity and sales.

“One area of similarity was that for employment, with only negligible job creation recorded across both sectors,” she said.

The PMI report comes a day after data showed the economy grew in the third quarter at its fastest pace since early last year, and upward revisions to previous quarters meant the economy is a lot stronger than previously thought.

That prompted some economists to revise up their 2019 and 2020 GDP forecasts, while President Jair Bolsonaro said the economy is firmly “on the right track”.

Wednesday’s PMI report showed that the services sector employment index fell to 50.4 in November from 53.0 in October, the lowest since July, and the new orders index falling to 51.7, the lowest since June.

At the composite level, new orders and employment fell to the lowest since June and July, respectively while the new export business index slumped to 45.5, its lowest since January 2017, IHS Markit said.

Reporting by Jamie McGeever; Editing by Chizu Nomiyama