Fri Feb 28, 2014 8:00am EST
SAO PAULO, Feb 28 (Reuters) – Brazil’s manufacturing activity expanded for the third straight month in February, though at a very timid pace as growth in new orders cooled, a private survey showed on Friday.
The HSBC Purchasing Managers’ Index for the Brazilian manufacturing sector fell to a seasonally adjusted 50.4 in February from 50.8 in January. The 50 mark separates contraction from expansion.
The new orders index fell to 50.9 from an 11-month high of 52.4 in the previous month, with those surveyed citing tougher economic conditions and sharper competition despite sustained demand.
Output expanded for the sixth straight month, the survey showed, though improving only slightly from January. Consumer goods posted a deterioration in output, while intermediate goods rose and capital goods stagnated.
High labor costs, poor infrastructure and a hefty tax burden still weigh heavily on Brazil’s manufacturers, whose lackluster performance has weighed on the nation’s economic growth.
Data on Thursday showed industry shrank 0.2 percent in the fourth quarter, dragged down by a 0.9 percent fall in manufacturing.
“The PMI reinforces perceptions that economic activity is stagnant,” said Andre Loes, chief Brazil economist at HSBC, adding that the data “suggests bad news on the inflation front.”
Prices for manufacturing inputs such as raw materials expanded at the fastest pace in four months, with some respondents singling out higher import prices.
While a fierce competitive environment had led manufacturers to avoid passing on higher prices to customers in recent months, that trend shifted slightly in February, with the output price index reaching its highest since November.
Input prices have risen continuously since September, 2009, while output prices have climbed for two full years, the index showed.
Meanwhile, employment among Brazilian manufacturers rose for the first time in 11 months, mostly in the consumer goods sector, with respondents citing new order growth.