BRASILIA, April 6 (Reuters) – Private sector business activity in Brazil shrank in March for the third month in a row and the fastest pace since last June, a purchasing managers’ survey showed on Tuesday, as a surge in the COVID-19 pandemic battered the dominant services sector.
Renewed lockdown and anti-virus restrictions forced services companies to hunker down and shed even more jobs, according to IHS Markit’s latest PMI survey, while inflationary pressures across services and manufacturing combined jumped to new highs.
The headline Brazil services PMI fell to 44.1 in March from 47.1 in February, the fastest contraction since July, while the composite PMI including manufacturing fell to 45.1 from 49.6, the lowest since June.
A PMI reading above 50.0 signals expansion, and a reading below shows contraction.
Pollyanna De Lima, economics associate director at IHS Markit, noted a “sharp deterioration in demand” while a weak currency and supply shortages fueled a surge in input costs, which many businesses dealt with by firing workers and raising prices.
“The private sector saw the fastest contraction in output since mid-2020. Meanwhile, business confidence took a hit as firms were increasingly concerned about the rise in (COVID-19) case numbers and the possibility that restrictions will stay in place for a while,” De Lima said.
The services employment index fell to 47.8 from 48.5, marking the fourth month of job losses. That pushed the composite employment index across manufacturing and services down to 48.0 from 49.7, IHS Markit said.
Only once in the past year – November, 2020 – has the services employment index been above 50.0.
The services new business index and the composite new orders index both fell to the lowest since June.
Inflationary pressures across manufacturing and services were the strongest since the data series began in early 2007, IHS Markit said. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)
