BRASILIA, March 2 (Reuters) - Brazil’s manufacturing sector expanded in February at its fastest rate in three months, according to a survey of purchasing managers’ activity on Monday, which also showed that the effects of the weak exchange rate are starting to be felt.
The IHS Markit Brazil manufacturing purchasing managers index (PMI) came in at 52.3, signaling the seventh straight month of growth and an increase from 51.0 the month before.
A reading above 50.0 marks expansion in the sector, while a reading below signifies contraction.
Production and hiring accelerated in February, while the real’s slide to a succession of record lows against the U.S. dollar helped fuel a sharp rise in factory gate inflation and rebound in the exports index, the figures showed.
The figures will likely be welcomed by the government, which has so far not joined private sector economists in cutting their 2020 growth forecasts, some of them to below the politically-sensitive threshold of 2%.
On the other hand, the economic and financial market effects of the mounting coronavirus fears globally are unlikely to have been fully reflected in February’s survey.
“After posting only marginal growth in December and January, Brazil’s manufacturing sector took off in February,” said Pollyanna De Lima, principal economist at IHS Markit.
“Buoyed by a solid and stronger expansion in demand, companies stepped up production and hiring activity. These positive developments, coupled with an elevated level of business sentiment, bode well for the sustainability of the upturn in months to come,” she said.
The employment sub-index rose to a five-month high of 51.7, while the real’s 10% slide against the dollar so far this year filtered into the data.
The input prices index surged to 64.6 from 57.5 in January, the highest since October 2018, and even though exports shrank for the sixth month in a row, the new exports orders index rose to 49.2, the highest since last August. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)