2023.02.0115:00:00UTC+00Brazil Manufacturing Downturn Eases In January

Brazil's factory activity continued to deteriorate at the start of the year, though the pace of decline softened since December amid slower reductions in output and new orders, survey data from S&P Global showed on Wednesday. Elsewhere, official data showed that producer price inflation slowed further in December.

The purchasing manager's index, or PMI, for the manufacturing sector rose to 47.5 in January from 44.2 in December. However, a reading below 50 suggests contraction in the sector.

According to goods producers, sales in January were dampened by weak demand, rising prices, and uncertainty regarding fiscal policy.

The decline in new orders was the slowest in three months, while new export orders fell at a sharper rate on the backdrop of challenging economic conditions globally and recession fears.

Similarly, output decreased at the weakest pace in the current three-month sequence of contraction.

On the price front, input price inflation rose to a five-month high in January, linked to higher prices for foodstuffs, metals, plastics and some imported components.

Nonetheless, the latest cost inflation was one of the slowest seen for four years. Output charge inflation was also contained in January.

Manufacturers reduced their staffing numbers slightly due to reduced production requirements, cost-cutting efforts, and subdued demand conditions.

Business sentiment remained positive in January amid hopes of a recovery in demand, investment and new product launches.

A report published by the Brazilian Institute of Geography and Statistics, or IBGE, showed that producer price inflation in the country eased further to 3.13 percent in December from 4.40 percent in November.

Further, the latest producer price inflation was the third lowest accumulated value in the year since the beginning of the historical series in 2014, the agency said.

On a monthly basis, producer prices fell 1.29 percent in December versus a 0.52 percent drop in November.