The Brazilian service PMI slipped to an all-time low of 27.4 in April – IHS Markit | Instant News


May 6 (Reuters) – Economic activity in Brazil collapsed to a record low in April, a purchasing manager’s activity survey showed on Wednesday, when the coronavirus crisis halted trade in most of Latin America’s largest economies.

Brazil’s IHS Markit service purchasing managers index (PMI) fell to 27.4 and the composite PMI covering manufacturing activity fell to 26.5, both the lowest levels since the survey began 13 years ago.

Figures above 50.0 mark expansion of activity, while numbers below indicate contraction.

The numbers add weight to the growing belief that Brazil will experience a deep and painful recession this year, with some economists and institutions predicting the worst economic collapse in at least half a century.

“The April survey shows the large scale and impact of the COVID-19 pandemic on the Brazilian private sector economy, with the contraction of survey records in new businesses and activities marked during the month.” said Paul Smith, director of economics at IHS Markit.

“In addition, confidence about the future has been understood to take a considerable blow, with companies pessimistic overall about the coming year because of increased concerns over the long-term damage to the economy from the pandemic,” he said.

Not only did the major indexes fall to their previous lows, there were also many sub-indices, including business expectations and new business in the service sector, and new combined orders and future output expectations.

The lowest reading of each index or sub-index in April was the 15.2 index for new composite export demand, said IHS Markit.

Employment fell to its lowest level in nearly four years, and will almost certainly fall further, economists say. Analysts at Bank of America Merrill Lynch on Tuesday raised their unemployment estimates to 15% later in the second quarter. (Editing by Chizu Nomiyama)

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