BRASILIA (Reuters) - Brazil’s services sector activity expanded in September at the fastest pace in six months, a closely watched purchasing managers index survey showed on Thursday, with employment growth in the sector hitting its highest in over five years.
The latest IHS Markit PMI figures suggest Brazil is bucking a global trend consistent with sharply slowing activity and even recession across the United States, Europe and Asia.
Brazil’s service sector PMI rose to 51.8 from 51.4 in August, the third consecutive reading above 50.0 and the highest since March, a sign that overall economic activity in the third quarter was pretty solid.
A PMI reading above 50.0 denotes expansion in activity, and a reading below denotes contraction. Services accounts for more than 70% of all economic activity in Brazil.
Coupled with the manufacturing PMI released earlier this week, Brazil’s composite PMI rose to 52.5 in September, also the highest since March, from 51.9 in August, IHS Markit said.
“The latest PMI data bring welcoming news of a stronger expansion in private sector output across Brazil, with a widespread acceleration in growth rates in the manufacturing and service sectors,” said Pollyanna De Lima, Principal Economist at IHS Markit.
“The relatively better demand environment, coupled with lower borrowing costs arising from further monetary policy easing, should boost consumption and investment in the near-term, ensuring that Brazil’s economy remain on a recovery path,” she said.
The service sector’s employment sub-index rose to 51.8, the highest since February 2015 and above 50.0 for the second month in a row. It is also the first time this has happened since early 2015.
The outlook for the services sector dimmed for a second consecutive month, however, with the business expectations sub-index falling to 75.2 from 78.1, IHS Markit said.
Brazil’s economy grew by 0.4% in the second quarter. Government officials, central bankers and most economists expect growth over the calendar year 2019 to be around 0.9% and accelerate to around 2.0% or more next year.
Reporting by Jamie McGeever; Editing by Chizu Nomiyama