Brazil’s services sector activity expanded in August, according to the latest S&P Global PMI survey, signaling a tentative recovery after a contraction in July. The seasonally adjusted Brazil Services PMI rose to 50.5 from 49.7 in the prior month, crossing the 50-point threshold that separates growth from contraction for the first time since June.
New business volumes held steady in August, following the sharpest decline in ten months recorded in July. Employment levels in the sector remained unchanged after two consecutive months of job cuts in June and July, suggesting stabilization in labor demand.
Business confidence among service providers improved, with the share of firms expecting higher activity rising to 32% in August from 29% in July—the highest level in three months. Input cost pressures persisted, with 41% of companies reporting increased costs, driven by materials such as cables, food, electronic components, paints, textiles, wood, energy, financing, fuels, labor, property taxes, and transportation. Only 16% of firms passed higher costs on to customers through price increases.
The broader Brazil Composite PMI edged up to 49.1 in August from 48.8 in July, remaining below the 50-mark for a second consecutive month due to continued weakness in the manufacturing sector. Analysts noted that while services provided some support to the broader economy, private sector momentum remained constrained by industrial sector headwinds.
Pollyanna De Lima, Associate Economics Director at S&P Global Market Intelligence, said the services sector offered some support to the overall economy but private activity remained under pressure from manufacturing weakness. A sustained recovery, she added, would likely depend on stronger demand, easing inflationary pressures, and greater corporate willingness to invest and hire.
