Brazilian services activity in July declined at the sharpest rate since mid-2009 mainly due to weak client demand, results of a survey by Markit Economics and HSBC revealed Friday.
The HSBC Brazil Services Business Activity Index dropped to 48.9 from 53 in June, Markit Economics said. A reading below 50 indicates contraction in the sector.
The volume of new business grew for the second month in a row, but at a modest pace. Backlogs declined and the service sector firms hired staff, extending the current sequence of hiring to three years.
Inflationary pressures also increased for the service sector firms. Further, firms were the least optimistic towards future activity growth since January 2011.
"Although the performance of the economy in 1H2012 may have been uninspiring, the
service sector played an important role in supporting growth," HSBC Brazil Chief Economist Andre Loes said.
"The fact that 2H2012 has begun with such a poor performance may weigh on expectations regarding the rest of the year."
The Composite Output Index, which combines manufacturing and services sectors, also declined to a 10-month low of 48.9 in July from 51.5 in June. Manufacturing
production declined for the fourth month running.
by RTT Staff Writer
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