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Brazil services expand for fourth straight month, growth pace slows
January 6, 2014 / 12:03 PM / 4 years ago

Brazil services expand for fourth straight month, growth pace slows

SAO PAULO, Jan 6 (Reuters) - Activity in Brazil’s services sector expanded for a fourth straight month in December, though at a slightly slower pace, a business survey showed on Monday.

HSBC’s Purchasing Managers Index for Brazilian services fell to 51.7 in December from 52.3 in November on a seasonally adjusted basis. A reading above 50 indicates expansion.

HSBC’s Composite Output Index for the country, which includes manufacturing activity, fell to 51.7 in December from 51.8 in November, though remained in positive territory for the fourth straight month.

The data will likely boost expectations that Brazil’s services sector will continue to support Brazil’s sputtering economy, which shrank 0.5 percent in the third quarter from the second quarter, its worst performance since the global financial crisis in 2008-2009. Government officials and private economists said Brazil would likely post positive growth for the last quarter of 2013, even if at mediocre rates.

Growth was broadly based, reaching all six categories of the survey for the second straight month, with incoming new business expanding for the sixteenth straight month. Survey respondents cited new contract wins, in some cases linked to the upcoming World Cup, which kicks off in June.

Employment increased for a tenth straight month as survey respondents remained more positive than negative on the outlook for business activity, though optimism fell to its lowest level in seven months.

“Slower growth in business activity was accompanied by a softer expansion in new orders and waning confidence, but also by less pressure on both input costs and prices charged,” wrote Andre Loes, HSBC’s chief Brazil economist.

The pace of input price increases for the services sector eased slightly but remained near the highest level in nearly a year and a half.

The pace of output price increases also slowed in December from the previous month, though prices in the hotels and restaurants category accelerated at their sharpest pace in almost four years according to the survey, compiled by research firm Markit.

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