Did Brazil’s Manufacturing Activity Improve in August?

According to a report by Markit Economics, the final Brazil manufacturing PMI (purchasing managers’ index) rose to 50.9 in August 2017 as compared to 50 in July. It beat the market expectations of 50.5. It was the strongest increase since June 2017.

The strong performance in Brazil’s (EWZ) manufacturing PMI in August was mainly due to the following factors:

• Production volume and output rose at a faster pace in August 2017.
• New business orders and export orders also showed solid improvement in August 2017. Export orders were at the highest level since April 2016.
• The employment growth also rose at a faster pace in that month. Plus, purchasing activity rose in August 2017.

The iShares MSCI Brazil Capped ETF (EWZ), which tracks the performance of Brazil, rose nearly 5.8% in August 2017. Brazil (BRZU) (FBZ) is one of the important economies of Latin America (ILF). In spite of huge ups and downs in Brazil’s political environment, the economy is now showing signs of recovery.

Michel Temer is the current president of Brazil. He aims to bring various changes and structural reforms, which could create sustainable growth. The expectation for reforms is driving investors’ sentiment in Brazil.

In the next part of this series, we’ll look at the performance of Brazil’s services PMI in August 2017.