Brazil’s business activity shows moderated growth rate last month as inflation escalates
(MENAFN) Business activity in Brazil showed a moderated growth rate in August, impacted by escalating inflationary pressures, according to a report released by S&P Global on Wednesday. The S&P Global PMI Brazil Services Business Activity Index recorded a value of 54.2 for August, a decrease of 2.2 points from July's 56.4, yet remaining above the neutral threshold of 50.0. This decline indicates a softening in demand conditions, which has subsequently constrained the growth of business activity.
The report highlighted several contributing factors to the heightened cost pressures, including the depreciation of the Brazilian real, droughts in various regions, and the ongoing effects of flooding in Rio Grande do Sul. These elements have driven up cost pressures to their highest level in over two years, leading to a more significant rise in selling prices.
Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, noted that while the slowdown in momentum among service providers in August is noticeable, it does not pose immediate concerns. She emphasized that growth rates remain historically robust, and the increase in job creation along with strong business confidence suggests that the slowdown may be temporary.
However, De Lima also cautioned that high borrowing costs and rising price pressures could negatively impact consumer spending and business investment. She pointed out that services companies experienced the slowest growth in new work in seven months, and a dip in business confidence might lead some firms to reduce hiring or investment activities.
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