Brazil's services sector expands in Dec for 4th month, but pandemic fears linger: IHS Markit

BRASILIA: Brazil's services sector expanded in December for a fourth straight month and at a slightly faster pace than the month before, a purchasing managers' survey showed on Wednesday, although underlying data painted a more mixed picture.

Services have lagged manufacturing and industry in the rebound from the COVID-19 crisis but have recently shown signs that the bounceback is underway, a view strengthened by hopes a vaccine will soon be available.

IHS Markit's headline Brazil services PMI rose to 51.1 from 50.9 in November. It was the fourth consecutive reading above 50.0, the threshold that separates expansion from contraction.

The slight rise in services accompanied the second consecutive manufacturing PMI decline, however, meaning the composite PMI encompassing both sectors slipped to 53.5 in December from 53.8 in November, IHS Markit said.

That marked the fifth straight month that business activity in Brazil's private sector has grown, but COVID-19 worries still linger.

"While the latest data provide some welcome reassurance that the service economy continues to show resilience to the pandemic, the sustainability of the recovery comes into question when we look at the jobs data and anecdotal evidence from survey participants," said Pollyanna De Lima, economics associate director at IHS Markit.

"The rise in infections before vaccines become widely available could bring in new restrictions and cut short the recovery," she said.

Within services the employment index fell to 49.3 from 51.3, as firms went back to shedding jobs. That pulled the composite employment index across manufacturing and services down to 50.4 from a nine-year high of 52.6.

Inflationary pressures continued to build, with the services sector input prices index rising to 66.5, the highest in four and a half years. The prices charged index rose to a one-year high of 53.4 from 51.3 in November, IHS Markit said.

The composite future output index rose to 75.3 from 70.2, marking its highest level since February last year just before the pandemic struck.