Brazil's Industrial Sector Contracts Less in October 2025 but Faces Significant Job Losses
Brazil's industrial sector shows slower contraction in October 2025 with rising PMI and significant job losses amid US trade tariffs, while businesses remain cautiously optimistic for 2024 recovery.
- • PMI rose to 48.2 in October but remained below 50, indicating ongoing contraction
- • Largest employment losses in the industrial sector since April 2023
- • US tariffs intensified the decline in international orders
- • Manufacturers express cautious optimism for production growth and investment in 2024
Key details
In October 2025, Brazil's industrial activity showed signs of easing contraction as the Purchasing Managers' Index (PMI) rose to 48.2, up from 46.5 in September, according to S&P Global data. Despite this improvement, the PMI remained below the key 50-point threshold for the sixth consecutive month, indicating that the industrial sector continued to contract.
Notably, the sector experienced its most severe employment decline in over two years, with job losses the highest since April 2023. Pollyanna de Lima, associate director of economics at S&P Global, highlighted that while there were positive signs like lower cost pressures enabling price reductions for finished goods, the industry was still impacted negatively by adverse international demand conditions. Specifically, U.S. tariffs exacerbated the decline in foreign orders, accelerating the contraction of international demand for Brazilian products.
Although new orders and production continued to fall, the rate of contraction softened in October, marking the weakest decline in the past six months. This cautious improvement accompanies a growing sense of optimism among manufacturers, who expect a recovery in demand and increased production in 2024. Plans for new products and investments are also underway, reflecting a cautious but hopeful outlook.
Despite ongoing challenges such as workforce reductions driven by cost-cutting and a shortage of skilled labor, the industry appears to be stabilizing. The PMI rise and pricing relief suggest an easing of recession pressures, offering hope for gradual recovery in Brazil's industrial sector over the next year.