Brazil manufacturing PMI hits record high 58.2 in July -IHS Markit

By Jamie McGeever

BRASILIA, Aug 3 (Reuters) - Brazilian manufacturing expanded in July at the fastest pace on record, a survey of purchasing managers' activity showed on Monday, roaring back to life from the depths of the COVID-19 crisis as new orders, confidence and hiring rebounded strongly.

The highest level of new orders in over a decade and the strongest job growth in almost a year helped propel IHS Markit's headline Brazil manufacturing purchasing managers index (PMI) to 58.2 in July from 51.6 in June.

That was the highest level since the index was first compiled in 2006, and appears to back up government and central bank officials' comments recently that the economy is recovering. A reading above 50.0 marks expansion in the sector, while a reading below signifies contraction.

The record expansion in July went "a long way" to closing the "considerable" gap in production that opened up from pre-COVID levels, said Paul Smith, economics director at IHS Markit. Over 80% of panelists expect growth to be sustained over the coming months, he said.

"The positive trends in both output and new orders is also helping to drive optimism about the future. That has helped encourage firms to rehire staff as plant operations are ramped up further," he said.

Among the notable sub-index PMI readings for July, output jumped to a record 62.9 from 54.9, and new orders rose to 60.5 from 52.8, the highest since January 2010 and the second highest ever.

The employment index rose to 52.3, above 50.0 for the first time in five months and the highest since September last year.

Brazil's economy is expected to post its biggest annual downturn on record this year. The government's forecast is for a 4.7% fall, and central bank chief Roberto Campos Neto has said the bank's forecast of a 6.4% decline is too pessimistic.

(Reporting by Jamie McGeever Editing by Chris Reese)

((jamie.mcgeever@thomsonreuters.com; +55 (0)11 97189 3169; Reuters Messaging: jamie.mcgeever.reuters.com@reuters.net))

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