BRASILIA, (Reuters) - Activity in Brazil's services sector fell sharply in April and led firms to shed jobs at a record pace, a private survey showed on Wednesday, suggesting the economy took another turn lower as the political crisis escalated.
The Purchasing Managers Index (PMI) for Brazilian services <BRPMIS=ECI> compiled by research firm Markit fell on a seasonally adjusted basis to 37.4 in April from 38.6 in March. The 50 mark of the index separates contraction from expansion.
The ongoing contraction in services, along with another sharp drop among manufacturers, dragged Markit's Composite Index <BRPMCP=ECI> to the lowest in the nine-year history of the survey, at 39.0 in April, from 40.8 in March.
"Firms shed jobs at record rates as part of efforts to cut costs and stay in business. Higher unemployment is likely to further aggravate domestic demand in coming months," Markit economist Pollyana de Lima said.
The Lower House of Brazil's Congress voted in mid-April to impeach President Dilma Rousseff for allegedly breaking budget laws. However, her immediate replacement while she awaits trial, Vice-President Michel Temer, is not expected to take office until May 12, leaving public administration virtually paralyzed.
The decline in manufacturing and services activity suggested by the PMI indexes throws cold water on hopes that Brazil's deep recession could be nearing a bottom. Industrial output grew in March at the fastest pace in more than two years, and business and consumer confidence measures had stabilized.
"Looking ahead, economic prospects remain bleak when so much uncertainty abounds in the market."