Brazilian manufacturing sector expands in November on strong upturn in new order intakes

The Brazilian manufacturing economy rose in November, supported by the most solid upturn in new order intakes in nearly seven years. The seasonally adjusted IHS Markit Brazilian Manufacturing PMI rose to an 81-month peak of 53.5 in November from previous month’s 51.2. This pointed to a strong rebound in the sector’s health. Within manufacturing, consumer goods was the best-performing category, although growth was also recorded in the intermediate and investment goods. Manufacturers in Brazil recorded the sharpest upturn in new work for nearly seven years. External markets added to the rise in total new orders; however, new export sales rose moderately.

Output grew at a rate not seen for almost five years as firms responded to resilient underlying demand. Another measure companies took was the hiring of additional workers. However, the pace of job creation was just mild. Manufacturers purchased more inputs in November to fulfill their order intakes. Purchasing levels rose at a marked rate that was the most pronounce since January 2013. Greater purchasing activity, along with low stock levels at vendors and disruptions in external markets affected on the supply stream.

The stocks of purchases dropped noticeably and to the greatest degree since June. Holdings of manufactured goods also dropped in November as companies utilized inventories to meet the rise in sales. Meanwhile, firms continued to focus on the completion of outstanding work, with backlogs down at the most rapid rate in four months.

Increased prices paid for commodities and other imported materials led cost inflation to rise sharply to 17-month peak in November. Factory gate prices rose as a consequence, with the pace of charge inflation the highest since February, noted IHS Markit. Forecasts of additional economic improvements, new client wins and product diversification stimulated sentiment towards the year-ahead outlook for production.

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