Brazil’s manufacturing sector deteriorated sharply in September, with factory output and new orders contracting as weaker demand weighed on production, employment and purchasing activity, according to S&P Global.
The S&P Global Brazil Manufacturing PMI fell to 44.8 in September from 46.3 in August, marking the weakest operating conditions since April 2023. A reading below 50 indicates contraction.
The quarterly PMI average dropped to 46.2, its lowest level since the second quarter of 2023.
Factory Output Records Sharp Contraction
Production declined for a fifth consecutive month, with the pace of contraction reaching its strongest since the COVID-19 disruption in early 2020.
New business also weakened substantially, falling at the fastest rate in nearly four years, while export orders declined for a fifth consecutive month.
Lower workloads allowed manufacturers to reduce outstanding business, with backlogs falling at one of the fastest rates recorded in the survey’s history.
Employment and Purchasing Activity Decline
Manufacturers reduced employment for a third consecutive month, although the pace of job cuts moderated compared with August.
Purchasing activity fell for a fifth month and recorded its steepest decline since April 2023, reflecting lower production requirements and weaker demand.
Inventories of inputs also decreased sharply, posting their largest contraction since October 2025.
Costs Rise but Weak Demand Limits Prices
Cost pressures strengthened during September, adding another challenge for manufacturers already facing declining orders.
Companies, however, had limited ability to pass those higher costs on to customers. Weak demand and competitive pressures pushed output-price inflation to a seven-month low.
Despite the deterioration in current operating conditions, manufacturers remained optimistic about production over the next 12 months.
September’s data point to a broad loss of momentum across Brazilian manufacturing, with simultaneous declines in production, new orders, exports, employment and purchasing activity.
