Brazil Services PMI Falls into Contraction

Brazil’s S&P Global Services PMI rose to 50.5 in August 2026 from 49.7 in July, moving back above the 50.0 neutral mark and signalling a renewed expansion in output. Demand conditions showed signs of stabilisation midway through the third quarter, with new business volumes broadly unchanged after falling at their sharpest pace in ten months in July. The transport, information and communication category recorded the strongest trends in output and new orders. Business confidence improved, with the share of firms expecting activity to increase over the coming year rising from 29% in July to 32%, lifting overall sentiment to a three-month high. Labour market conditions also stabilised, with service-sector employment unchanged after declines in June and July. Input costs continued to rise sharply, although the pace eased from July. Meanwhile, selling-price inflation strengthened as firms sought to protect margins and pass some of their higher costs on to clients.

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.