Although Brazil emerged from recession in Q1, the recovery remains fragile and signs of softness are still prevalent in some segments of the economy. For instance, industrial production expanded at a slower rate in September, to be up just 2.6% (y-o-y) versus 4.0% in August. That said, the latest reading is the best performance for a September month since 2013, and in m-o-m terms, industry recovered by 0.2% (-0.8% August). While production of intermediate and consumer goods provided monthly support to output, capital goods showed some payback by registering a contraction. Elsewhere, the fragility of the recovery has also been underscored by the deterioration in service sector activity – as measured by October’s PMI index – amid weak consumer sentiment, weighed down by political and economic uncertainties. Despite this, there was some encouraging news on the economic front – in particular business confidence reached its highest level since 2014 in October. Furthermore, the indicator measuring an increase in the number of firms planning to hire more workers bodes well for the improving labour market.