Thin silver lining for Brazil in dark PMI cloud

The Purchasing Managers' Index PMI – an indicator of the health of a country's manufacturing sector – showed a declaration in rates of contraction in new orders and production in Brazil last month.

The country's PMI increased to 47.0 in September from 45.8 the previous month, but was still under the critical 50 mark.

A PMI of below 50 indicates contraction and above 50 expansion.

"Although rates of contraction in new orders and production eased, the downturn remains sharp. Companies continued to shed jobs and reduce inventory levels," said Markit Information Services, which releases the index.

Despite Brazil's economy being still in contraction some components of the PMI offered some hope.

New orders increased to 46.3 from 44.1, exports rose to 50.0 from 49.5 and the labor component increased, suggesting that conditions in the labor market "did not deteriorate further in September," according Capital Economics.

The research firm added: "Both price components fell, which is positive for inflation, although a recent hike in regulated fuel prices means that the headline rate probably still has further to rise.

"We wouldn't take today's figures as a sure fire sign that the worst is over for Brazil's economy, but it does appear that that conditions are beginning to stabilise – even if the political mess is intensifying," it added, likely alluding to the Car Wash (Lava Jato) corruption scandal and calls for President Dilma Rousseff to be impeached.