Brazilian services activity in November shrank the most in nine months, a private survey showed on Tuesday, highlighting the nation's uneven recovery from the deepest recession in a century. The Purchasing Managers Index (PMI) for the Brazilian services sector compiled by research firm Markit fell to 46.9 from 48.8 in October. Readings below 50 indicate contraction in activity.
Discounts helped to bring in new orders but that was not enough to stave off a contraction in backlogs. Cost inflation persisted, driving firms to cut payrolls for a 33rd straight month.
The positive momentum seen in manufacturing is likely to be carried over into the new year as companies work to rebuild their inventories to fulfill new contract obligations, said Markit economist Pollyanna De Lima.
On the other hand, services firms will hope for a meaningful upturn in demand if they are to be kept busy.
Improving conditions for manufacturers failed to keep Markit's composite PMI from declining to 48.9 in November from 49.5 in the prior month. Services account for about 60% of Brazil's GDP, which is expected to grow around 0.9% this year.