Brazil’s Manufacturing PMI Improved: What’s Driving the Growth?

Brazil’s manufacturing PMI in October

According to data provided by Markit Economics, the final Markit Brazil Manufacturing PMI (purchasing managers’ index) stood at 51.2 in October 2017 as compared to 50.9 in September 2017. October PMI beat the initial estimate of 51.2 and posted the strongest rise since June 2017.

Brazil’s Manufacturing PMI Improved: What’s Driving the Growth?

The improvement in manufacturing PMI in October was mainly due to the following factors:

  • Production output and volume rose at a higher rate in October 2017 as compared to the previous month.
  • Both new business orders and export orders improved at a stronger rate in that month.
  • Job growth in the manufacturing sector also improved in the same month.

Performance of major ETFs in October

The iShares MSCI Brazil Capped (EWZ), which tracks the performance of Brazil (FBZ), fell nearly 3.6% in October 2017. The Direxion Daily MSCI Brazil Bull 3X ETF (BRZU) fell nearly 12.0% in the same month.

The weaker performance of Brazil’s major ETFs suggests that investors remained cautious about the market performance. However, the improvement in the manufacturing activity is signaling that domestic demand improved sharply.

In the next part of this series, we’ll analyze the services PMI for Brazil in October 2017.