Brazil's manufacturing sector swung back into expansion in April, with the purchasing managers' index (PMI) climbing to a 14-month peak of 52.6 points from 49.0 in March, as a surge in export orders compensated for persistent weakness at home, S&P Global said.

Any reading above 50.0 signals expansion in activity. The April print ended an 11-month contraction.

Production volumes rose for the first time in a year and at the sharpest pace since March 2025, underpinned by the strongest growth in new export business since October 2024.

Survey respondents pointed to gains in markets including Argentina, Italy, Mexico, and Poland, with some firms citing US tariffs as a factor in winning new customers by diverting trade flows in their favour.

The domestic picture remained subdued, however. Total new orders fell for a thirteenth straight month, though the rate of decline was the slowest in a year, as weak local demand and competitive pressures continued to drag on overall sales.

Cost pressures intensified sharply during the month. Both input costs and output prices rose at their steepest rates since the second quarter of 2021, with panellists attributing the acceleration to the Middle East conflict, which pushed up prices for freight, fuel, oil, and raw materials while triggering supply shortages and significant delivery delays.

Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said business sentiment had nonetheless improved, although April proved to be a “mixed month” for Brazil’s manufacturing sector as the export boost was partially offset by weaker demand at home.

Adding to the sector’s difficulties are surging cost pressures, De Lima added, with recent data indicating that input prices have reached their highest level since the COVID-19 pandemic, as the war in the Middle East caused supply shortages and notable delays in delivery times, leaving many firms facing squeezed margins, she said.

“Despite these challenges, there was a more optimistic outlook among Brazilian manufacturers. Many firms are feeling more confident about their prospects over the next year, buoyed by hopes of an end to the war,” added De Lima.

“They anticipate that market activity and demand will pick up significantly as recovery gains momentum.”