Brazil Services Sector Shows Softer Contraction in October

The S&P Global Brazil Services PMI rose 1.8 points to 53.1 in February 2026, up from 51.3 in January, marking the second-fastest expansion since November 2024, behind only December, and extending the growth streak to four consecutive months. Brazilian services firms reported a fourth straight monthly rise in new order volumes midway through Q1. Excluding December, this was the strongest pace of growth in 11 months. Companies secured more work despite raising selling prices at the fastest rate in three months. Input costs rose sharply, though inflation slowed to a two-year low, still above output price increases. Services employment increased in February, recovering after a decline in January, the first drop in five months. Looking ahead, service providers expressed optimism for output growth over the next 12 months, citing advertising, legislative changes, new offerings, investment, and the FIFA World Cup as key growth drivers.

The S&P Global Brazil Services PMI fell to 51.3 in January 2026 from 53.7 in December, pointing to a slower and only marginal expansion. Growth in business activity eased as new orders rose at the weakest pace in the current three-month growth streak. Reports of limited new work weighed on sentiment, with business confidence dropping to a six-month low and remaining well below its long-run average. As a result, hiring stalled and service providers cut jobs for the first time in five months, though the decline was mild. Inflation in the sector eased to a 20-month low, broadly aligning with historical norms. Prices charged rose at the slowest pace in seven months but remained elevated.

The S&P Global Brazil Services PMI climbed to 53.7 in December 2025 from 50.1 in November, signaling the fastest expansion in more than a year. Stronger new order growth was the main driver of higher activity across Brazil’s dominant services sector. Sales increased for a second straight month and at the sharpest pace since November 2024. To meet rising demand, service providers continued to hire, marking the fourth consecutive monthly increase in employment and the strongest since March, albeit still modest overall. Hiring was also supported by optimistic expectations for output growth in 2026. However, business confidence eased from November’s six-month high amid concerns that upcoming elections could disrupt operations. Cost pressures remained elevated, driven by higher energy, food, labor, transportation, and electrical item expenses, though the pace of inflation slowed to its lowest level in just over a year and a half.