Brazil manufacturing PMI rises to 52.5 in August, highest since March

BRASILIA: Brazil's manufacturing sector bounced back in August, a survey of purchasing managers' activity showed on Monday, expanding at its fastest pace in five months in another sign that the worst for Latin America's largest economy may be behind it.

The IHS Markit Brazil manufacturing purchasing managers index (PMI) rose to 52.5 in August from 49.9 in July, which had marked the sector's first contraction in over a year and fueled talk of economic stagnation and possible recession.

A reading above 50.0 marks expansion in the sector, while a reading below signifies contraction.

The upswing comes days after official figures showed that Brazil's economy grew by 0.4% in the second quarter, twice as fast as economists had expected and comfortably steering it away from recession after it had shrunk in the first quarter.

Among the index's sub-components, new orders surged to 54.9 in August, the highest since March last year and one of the highest in several years. That may have been driven by overseas orders, as the real fell 8% against the dollar in August, its biggest monthly decline in four years.

The employment index bounced back to 50.4, also the highest since March this year. Although that snapped a run of three consecutive months of contraction, it still signals general weakness and widespread slack in the labor market.