Brazil’s manufacturing PMI rises past 50 for first time since 2015

(Reuters) – Brazil’s manufacturing activity improved in April for the first month since January 2015, a private survey showed on Tuesday, underscoring expectations of a gradual recovery from the country’s deepest recession on record.

The Purchasing Managers’ Index BRPMIM=ECI compiled by research firm Markit rose to a seasonally adjusted 50.1 in April from 49.6 in March. Readings above the 50 threshold indicate improving business conditions for manufacturers.

Output and new orders rose for a second straight month, encouraging companies to increase purchases of raw materials. The improvement was led by the domestic market as new export orders decreased, Markit said in a report.

Official data have also showed signs of a tentative recovery in industrial output, which returned to 2009 levels after a three-year-long downturn. The national statistics agency last month said the worst seemed to be over for the sector.

“Brazil’s manufacturing industry kept itself in positive ground during April,” Markit economist Pollyanna De Lima said.

“Even so, manufacturers seem a way off from operating at full capacity,” she added, noting that manufacturers continued to cut jobs last month.

Economists forecast Brazil’s industrial output to grow 1.4 percent and gross domestic product to expand 0.4 percent in 2017, according to a weekly central bank survey. Brazil’s GDP fell more than 3 percent in each of the past two years.

(Reporting by Silvio Cascione; Editing by Chizu Nomiyama)