Activity index in Brazil improves in May, but still shows retraction

The Brazilian Consolidated Production Data Index (PMI) in May was 28.1 points, according to the consultancy IHS Markit. The result was released on Wednesday (3) and recorded the first growth of the indicator in four months. The index was only slightly higher than the record low of 26.5 recorded in April. The 50-point mark separates retraction growth. The result indicates another considerable drop in private sector activity. Production volume continued to contract sharply, both in the economy of the industrial sector and in services, the consultancy said. "New business volumes received were again much lower, falling at an almost unchanged rate from the record for the series seen in April," the report says. "Restrictions related to the Covid-19 outbreak continued to put pressure on demand for both manufactured products and services." The seasonally adjusted Brazilian services sector PMI was indicative of another "substantial contraction" in segment activity in May, recording 27.6 points, compared to 27.4 in April. "The May PMI data indicated that the 2019 coronavirus pandemic continued to have a severe impact on the performance of the Economy of the Brazilian service sector," IHS Markit said. "Activity fell at a rate close to the record for the survey recorded in April, while the volume of new business contracted at an unprecedented rate," the consultancy said. "Job cuts also intensified and were the second most pronounced in more than 13 years of data collection, with the degree of optimism in the future remaining negative overall."