Brazil Services Activity Rebound

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.

The S&P Global Brazil Services PMI rose to 50.1 in November 2025 from 47.7 in October, edging back into expansion and signaling broadly stable activity. Sales increased for the first time in seven months, though growth was modest. New orders also rose despite another sharp increase in output prices, which remained above their long-run average but eased from October. Input costs continued to climb, with inflation hitting a three-month high and staying well above historical norms. Hiring remained constrained by cost-cutting efforts and skill shortages, but employment still rose slightly for a third month. The Future Output Index reached a six-month high, reflecting stronger optimism for 2026, supported by expectations of improving demand, though confidence stayed below its long-term average.