Two recent data releases are pointing towards a manufacturing recovery in Brazil. Industrial production grew +0.8% m/m in August, higher than expected. This reflects higher mining activity, while the production in consumer and capital goods fell. Secondly, the September Purchasing Managers Index (PMI) signaled the highest manufacturing production growth in one and a half years, standing at 53.4 points (a reading above 50 signals growth). The upturn in order books seems to have been driven by the domestic market, as exports were down. This is in line with the fact that the least open emerging economies are faring better than the most open ones amid high trade policy uncertainty and escalating trade tensions. The good job performance suggests that businesses expect growth momentum to be sustained in the near term. A gradual return of confidence and domestic monetary easing could help the economy accelerate from growth of +1% this year to +1.8% next year.
