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The HSBC Purchasing Managers' Index for the
Brazilian manufacturing sector <BRPMIM=ECI> rose to a seasonally
adjusted 50.7 in January from 50.2 in December. The 50 mark
separates contraction from expansion.
The output index rose to its highest since Dec. 2013, mostly
driven by consumer and intermediate goods. Capital goods, which
tend to track companies' outlook for future growth, contracted.
An index of Brazilian industrial confidence remains near
historic lows as the nation's economy faces a potential
recession this year, weighed down by a drop in commodities
prices and government fiscal tightening.
Despite the slowdown, input and output prices rose more quickly
than in the previous month.
The cost pressure was "probably a result of the Brazilian real's
depreciation," said Andre Loes, chief Brazil economist at HSBC.
Brazil's currency <BRBY> has weakened against the dollar for
five straight months, driving up the cost of imported goods and
components.
High labor costs, poor infrastructure and a hefty tax burden
still weigh heavily on Brazilian manufacturers, which have
struggled to expand over the past four years.
Brazil's industrial production likely contracted 2.5 percent in
2014, according to a central bank poll released this month.
(Reporting by Asher Levine, Editing by Chizu Nomiyama)
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