Brazil's service sector shrank drastically in May as the coronavirus, or Covid-19, pandemic continued to hurt the economy severely, survey data from IHS Markit showed on Wednesday.
The services Purchasing Managers' Index was at 27.6 in May, largely unchanged from 27.4 in April. A PMI reading below 50 suggests contraction in the sector. New work declined sharply as demand remained poor amid the Covid-19 pandemic. Firms also signalled a sharp fall in employment. Overall sentiment in the services sector remained negative and firms intensified discounting to retain existing clients and attract new ones. The Composite PMI, which combines manufacturing and services, edged up to 28.1 from a record low 26.5 in April. "Hopes of any swift recovery to the pandemic are starting to evaporate as numerous firms reported reductions to their workforce numbers as part of wider efforts to control costs and provide some margin protection at a time of rapidly diminishing sales," Paul Smith, economics director at IHS Markit, said. "This is adding to an increasingly bleak outlook, with firms remaining negative overall about activity over the coming year as fears mount over the longer-term impact of COVID-19."