Brazil manufacturing breaks slump, advances slightly in December: PMI

[January 02, 2015]  By Asher Levine

SAO PAULO, (Reuters) - Brazil's manufacturing activity ended a three-month contraction in December as new orders picked up, though overall growth remained very slight, a private survey showed on Friday.

The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector rose to a seasonally adjusted 50.2 in December from 48.7 in November. The 50 mark separates contraction from expansion.

The new orders index rose for the first time in nine months. Some businesses cited an increase in demand following Brazil's October presidential election, with customers anticipating future price hikes, the survey showed.

Output shrank for the fourth straight month, but at the slowest pace over that time period. Still, a weak economy continued to sap demand for consumer and intermediate goods, according to the survey.

Input and output prices rose, impacted by weakness in Brazil's currency,  which has lost nearly 13 percent against the dollar this year.

High labor costs, poor infrastructure and a hefty tax burden still weigh heavily on Brazil's manufacturers, whose lackluster performance has weighed on economic growth.

Brazilian industrial production is expected to post a 2.5 percent contraction in 2014, according to a central bank poll released last week. Economists in the poll predict economic growth of just 0.13 percent in 2014 and 0.55 percent next year.

Despite the slightly better industrial PMI data in December, "The outlook for the economy in 2015 remains weak," said Andre Loes, chief Brazil economist at HSBC.

(Reporting by Asher Levine; Editing by Chizu Nomiyama)

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