FX.co ★ Brazil Services Activity Expands Most Since June 2022

Brazil's service sector experienced its fastest growth in over two years this July, driven by strong demand, according to data released by S&P Global on Monday.

The seasonally adjusted S&P Global Brazil Services Business Activity Index increased to 56.4 in July, up from 54.8 in June. Any reading above 50 signifies expansion.

New business gains grew at the second-highest rate in twenty-one months, supported by positive demand fundamentals. This momentum encouraged companies to expand their workforce in July, although overall employment growth was moderate.

However, cost pressures increased, with input price inflation reaching a 17-month high in July, attributed partly to currency depreciation. The rise in costs for food, fuel, construction materials, energy, and rent also contributed to the overall inflation. Consequently, selling prices witnessed the most significant increase since March of the previous year.

The composite output index rose to 56.0 in July from 54.1 in June, marking the fastest expansion in Brazil's private sector since June 2022. Growth rates accelerated in both the manufacturing and service sectors, with services spearheading the upturn.