The Purchasing Managers' Index compiled by market research firm Markit fell to 50.7 from 52.3 in April, edging close to the 50 milestone separating an expansion from a contraction.
New orders slowed for a third straight month, suggesting growing uncertainty around this year's presidential elections are weighing on demand. Meanwhile, cost inflation reached the highest since November due to a spike in the US dollar and higher prices for basic products.
"A combination of currency depreciation, lingering political instability and surging commodity prices placed the economy on a tightrope," Markit economist Pollyanna De Lima said.
The figures paint a mixed outlook for economic growth in Brazil, the latest in a string of underwhelming economic indicators. A rebound is unlikely to come soon as nationwide strikes that paralyzed key corporate sectors this month could dampen sentiment going forward.