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The PMI of S&P Global Fell to 47.7 in August, Indicating Retraction of the Brazilian Industry. The U.S. Tariff Hike and Expensive Credit Have Reduced Orders and Jobs, but Companies Are Investing in Technology and New Markets to Recover.
The Brazilian industry went through a August of strong cooling, marked by two main factors: the new tariff barrier imposed by the United States on national products and the rising costs of credit within the country.
The result was the worst deterioration of operational conditions in over a year.
The survey by S&P Global shows that the Purchasing Managers’ Index (PMI) fell to 47.7 points, down from 48.2 in July.
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With this performance, the indicator remained below 50 points for the fourth consecutive month, a threshold that differentiates expansion from retraction.
Brazilian Exports Under Pressure
The U.S. “tariff hike” came into effect in August and directly affected strategic sectors of Brazil.
Products such as meat, coffee, fruits, and footwear — which account for 36% of exports to the U.S. — now face a 50% surcharge.
Other goods also face taxation of 25% to 50%.
This scenario led companies to report the cancellation of international contracts and a decrease in the volume of orders, aggravating the slowdown of local production.
To try to contain the losses, the government announced facilitated credit, tax postponements, and new incentives for exports.
Domestic Demand Also Weakens
It was not only the external market that weighed on performance.
With interest rates at high levels, consumers and companies reduced demand, which intensified the fall in orders.
According to the survey, the retraction in the entry of new orders was the most intense in the last two years.
The direct consequence was the reduction of productive activity for the fourth consecutive month.
The contraction also affected the labor market, with the most significant job cuts since April 2023.
Cheaper Inputs Ease Some Costs
Amid the adverse situation, there was some positive news: the cost of inputs fell to the lowest level in 17 months.
Only sectors such as chemicals, food, metals, and electronics saw price increases, while steel, oil, cotton, and pulp became cheaper.
This reduction helped some companies mitigate losses.
Industry Bets on Recovery in the Medium Term
Despite the retraction, the industrial sector has not lost optimism.
The expectation is that the diversification of export destinations, along with the modernization of the manufacturing base and investment in technology, will help regain growth in the coming months.
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