Brazil Services Activity Contracts at Fastest Pace Since

The headline S&P Global Brazil Services Business Activity Index fell to 44.5 in October 2026 from 49.2 in September, signaling the sharpest contraction in output since April 2021. The downturn was driven by a further decline in new business inflows, marking the second consecutive monthly decrease. Sales fell at the fastest pace in more than five years, as weak demand weighed on business sentiment among service providers. Although growth expectations remained positive, overall confidence slipped from September. Softer demand also affected employment, with spare capacity prompting further job cuts across Brazil's services sector. On the price front, cost pressures eased in October but remained steep by historical standards. Meanwhile, prices charged for services increased at the slowest pace since mid-2025, although the rate of inflation remained above its long-run average.

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.