Brazil Services PMI Falls Into Contraction

The S&P Global Brazil Services Business Activity Index fell to 49.2 in September 2026 from 50.5 in August, signaling a renewed contraction in output and the fastest decline since October 2025. Business conditions deteriorated as weaker demand led to declines in business activity, employment and new orders. Budget constraints among clients, competitive pressures, weak demand and project cancellations pushed overall sales into contraction at the end of the third quarter. Amid dwindling new work, service providers also reduced headcounts. However, firms became more optimistic about growth prospects, citing hopes for improved economic conditions after the presidential election. Meanwhile, input-cost and selling-price inflation both eased.

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.