Brazilian manufacturing expanded at a record pace in October, a survey of purchasing managers' activity showed on Tuesday, as a rise in employment and export orders to new highs helped extend the sector's strong post-coronavirus recovery.
IHS Markit's Brazil manufacturing purchasing managers index (PMI) report was mostly solid, but also showed record high input and output prices due to the persistently weak exchange rate, and a softening of future output expectations.
The headline PMI index rose to 66.7 in October from 64.9 in September, the highest level since the index was first compiled in February 2006. A reading above 50.0 marks expansion, while a reading below signifies contraction.
Brazilian manufacturing and industry have recovered from the worst of the COVID-19 crisis far quicker than the dominant services sector, which Economy Ministry's Waldery Rodrigues said on Friday still needs incentives.
Monthly rates of expansion for output, new orders, exports and employment were at or near record highs. In particular, the upturn in jobs bodes well for the wider economy and may lead to improved consumption trends in coming months, said Pollyanna De Lima, Economics Associate Director at IHS Markit.
While currency depreciation helped improve competitiveness ... in international markets, it pushed up prices paid for imported items. This, coupled with raw material shortages, saw manufacturers' expenses rise at the fastest pace since data collection started, she added.
The employment index rose to a series high 58.2 from 56.5. Lifted by the Brazilian real's 30% slide against the dollar this year, the new export orders index also rose to a series high of 54.2 from 53.9, IHS Markit said.
The real's weakness also pushed input costs and output prices to new highs. The input prices index rose to a record 89.5 from 87.2 in September, while the output prices index rose to 78.8 from 76.6 in September.