Brazil Services PMI Falls into Contraction

Brazil's S&P Global Services PMI fell to 49.7 in July 2026 from 51.3 in June, signaling the first contraction in the sector in nine months. New business declined after a brief expansion in June, with the pace of contraction marking the sharpest in ten months. Employment also fell for a second consecutive month. Firms continued to report higher energy, labor, material, and transportation costs, although input cost inflation eased to a four-month low. Output price inflation also slowed to its weakest pace in four months but remained historically elevated. Business confidence improved from June's 11-month low, supported by expectations of stronger client demand after the presidential election and hopes that inflationary pressures will continue to ease.

Brazil's S&P Global Services PMI rose to 51.3 in June 2026 from 50.4 in May, signaling a slightly faster pace of expansion in the services sector and extending the current growth streak to eight months. The survey showed that new business continued to increase only modestly, with transport, information and communication, and consumer services posting growth, while finance and insurance and real estate and business services contracted. The improvement in demand came despite elevated price pressures, as output charge inflation accelerated and remained among the strongest in 16 months. Input costs also rose at the fastest pace since February 2025, driven by higher prices for commodities, fuel, transportation, and food. Meanwhile, employment declined, ending a four-month period of job creation, as firms cited layoffs and restructuring efforts. Confidence weakened to an 11-month low amid concerns over the upcoming presidential election, economic instability, and geopolitical tensions.

Brazil’s S&P Global Services PMI fell to 50.4 in May 2026 from 52.3 in April, moving closer to the 50-point threshold and signaling only marginal expansion in the sector. The survey showed that new business was broadly stagnant during the month, with transport, information and communication the only monitored segment to record higher output. The slowdown in demand coincided with elevated price pressures, as output charge inflation remained the second-highest in 15 months despite easing from April. Input costs rose at the fastest pace since February 2025, with consumer services facing the strongest cost pressures. Rising operating expenses and fragile demand also weighed on hiring activity, with employment growth slowing to the weakest pace in the current four-month expansion. Meanwhile, high inflation, intense competition, and challenging business conditions dampened confidence among service providers.