6/11/2014: BRIC PMIs: Heading for a Recession...

BRIC PMIs are out for October, signalling sharp drop-off in economic activity across the EMs. Here is the updated data:

Manufacturing:

• Brazil Manufacturing PMIs slipped deeper into contraction territory for the second consecutive month, dropping from 49.3 in September to 49.1 in October. 3mo average is now at 49.5 compared to 3mo average through July at 49.0. Year on year, 3mo average is down 0.7 points.
• Russia Manufacturing PMI slipped from 50.4 in September to 50.3 in October, also signalling a slowdown in growth, but not an outright contraction as in the case of Brazil.
• China Manufacturing PMI improved to 50.4 in October from 50.2 in September. 3mo average through October is now at 50.3, up slightly on 50.0 on 3mo period through July 2014 and almost unchanged on year ago (50.4).
• India Manufacturing PMI improved from 51.0 in September to 51.6 in October, with 3mo average through October at 51.7, slightly below 51.8 3mo average through July. Year on year 3mo average through October is up very strongly 2.4 points (from 49.2 in August-October 2013).

Overall, Manufacturing activity across BRICs remains highly subdued with India being the only country posting a weak, but positive trend from Q2 2013 on.

Services:

• Brazil Services PMIs fell sharply into contraction territory, from 51.2 in September to 48.2 in October. 3mo average is now at 49.5 compared to 3mo average through July at 50.6. Year on year, 3mo average is down 1.4 points. This means both sides of Brazil's economy are now in contraction, first time this happened since August 2013.
• Russia Services PMI contracted sharply from 50.5 in September to 47.4 in October, also posting an outright contraction as in the case of Brazil. 3mo MA is now at 49.4 which is a shallower contraction signal than 48.1 3mo average through July. A year ago, 3mo average was running at 51.9.
• China Services PMI posted a slowdown in growth to 52.9 in October from 53.5 in September. 3mo average through October is now at 53.5, up on 51.3 for the 3mo period through July 2014 and higher than 52.6 reading a year ago.
• India Services PMI deteriorated from 51.6 in September to 50.0 in October, with 3mo average through October at 50.7, below 51.3 3mo average through July. Year on year 3mo average through October is up very strongly (from 46.4 in August-October 2013).

Overall: Services activity deteriorated in all BRIC economies, while Manufacturing performance deteriorated in two economies and improved in 2 other.

Summary of both PMIs changes is here:

Using a simple total of two PMIs, we can trace overall trends in the BRIC economies (without weighting these by lagged services v manufacturing shares). The dynamics are striking:

Overall economic conditions across the BRIC economies deteriorated in October compared to September, with Russia leading with a sharp downturn. Downward trend in the BRIC economies has now been in place since January 2013, with Russian economy leading in this dynamic from October 2012.

Note: you can read more detailed analysis of Russian PMIs here: http://trueeconomics.blogspot.ie/2014/11/6112014-russia-pmis-signalling-poor.html