The S&P Global Brazil Services PMI dropped to 46.3 in July 2025 from 49.3 in June, remaining below the 50 mark for the fourth straight month and signaling a sharper contraction in the services sector. New business intakes fell at the fastest pace since April 2021, prompting the steepest drop in output in over four years. Employment declined for the first time since October, while business confidence hit its lowest level since mid-2020. Firms reported rising input costs due to material prices, tax hikes, and exchange rate pressures, though cost inflation slowed to an eight-month low. In contrast, prices charged rose at the fastest pace since February. Weak demand, financial stress, and concerns over the 2026 election further weighed on sentiment, driving optimism to a five-year low—nearly 14 points below the historical average.