December 3 sees the eighth public release of data for the BANCO REAL Brazil Purchasing Managers’ Index (PMI), a comprehensive and early indicator of trends in the Brazilian manufacturing sector. In addition to the headline BANCO REAL PMI – a composite indicator designed to provide a single-figure snap shot of the health of the manufacturing sector – the survey also tracks changes in output, new orders, employment, inventories, prices and supplier delivery times. Index readings above 50.0 signal expansion from the previous month, readings below 50.0 contraction.
The BANCO REAL PMI posted 56.4 in November, easing slightly from October’s survey high of 57.2, but nevertheless remaining at a level indicative of a robust improvement in manufacturing operating conditions.
Brazilian manufacturers expanded production at a marked rate in November, although growth eased from October’s high. Anecdotal evidence suggested that favorable market conditions and further growth of new orders had led to the rise in output.
Total new order volumes continued to increase sharply in November, bolstered by strong underlying demand, mainly in domestic markets. New export orders, in contrast, remained more muted on the back of a strong real.
Backlogs of work at Brazilian manufacturers increased for a ninth consecutive month in November, despite higher production levels. Unfinished business continued to accumulate at a strong rate, albeit less marked than in the previous month.
Firms in the Brazilian manufacturing sector added to their workforces at a robust pace in November, although the rate of employment growth edged down from October’s high.
Despite a sharp rise in quantities of purchases, manufacturers’ stocks of raw materials and semi-manufactured goods fell for a 12th consecutive month. Stocks of finished goods rose for the first time in three months in November, albeit only negligibly.
Input price inflation was the weakest for nine months in November, although firms still reported a robust increase in their average costs. Higher prices for various raw materials, including oil, foodstuffs and plastics, contributed to the rise in firms’ average costs.
Brazilian manufacturers continued to raise their charges, albeit only moderately. Anecdotal evidence suggested that companies had raised factory gate prices in line with rising costs.
