6/4/15: BRIC Services PMIs & Overall Activity in Q1 2015

BRIC Services PMIs (published by Markit) are finally out, with the last two countries instalments today, so time to look at the Q1 2015 data. And from the top level view, things are not encouraging:

• Brazil Services PMI slipped from 52.3 in February (a 14-months high that was a huge upside surprise) to a 70-months low of 47.9 in March - a massive fall. On a quarterly basis, things are not as bad, but that is all down to February reading. 3mo average for Q1 is at 49.5 - still contractionary/zero growth, compared to 49.3 Q4 1024 average and against weak growth recorded in Q1 2014 (50.5 average). In last 8 months, Brazil managed to post only two months of Services PMIs above 50, with only one month reading being statistically significantly above 50.0. In short, we now have a sign of deepening slowdown in the economy, based on both Manufacturing and Services surveys.
• Russia Services PMI was predictably weak at 46.1 in March, although a gain on totally abysmal 41.3 reading in February. 3mo average through Q1 2015 is at 43.8 and this is well below already contractionary 47.1 average through Q4 2-14. Q1 2014 registered a weak contraction/static growth of 49.6. March reading was the strongest in 5 months, but overall Services side of the Russian economy has posted below 50 survey readings continuously over 6 months now. This, coupled with another (4th monthly) below 50 reading in Manufacturing suggests that there is an ongoing significant recession in the economy and that this has accelerated in Q1 2015 compared to Q4 2014.
• China Services PMI remained in relatively moderate growth territory in March (at 52.3 against 52.0 in February) and 3mo average for Q1 2015 is at 52.0, weaker than Q4 2014 average of 53.2, but up on Q1 2014 average of 51.2. China never posted below 50 PMI in Services before , so we are left tracking relative weaknesses in positive growth signals here. Weak improvement in Services survey is offset, in China's case, by strong deterioration in Manufacturing index which fell below 50 in March.
• India Services PMI was somewhat weaker in March 2015 at 53.0 compared to February 53.9 reading. Still, this marks the second highest reading in 9 months. India's Services PMI average for Q1 2015 is at 53.1 - a major improvement on 51.3 average through Q4 2014 and a big gain y/y - in Q1 2014, Services PMI was averaging only 48.2. March marked 11th month of above 50 readings for Indian Services surveys. India is the only BRIC country that managed to post m/m growth (above 50 readings) across both sectors: Manufacturing and Services.

Chart below shows Services surveys dynamics:

Table below summarises changes in Manufacturing and Services PMIs:

Pooling together Services and Manufacturing surveys data, chart below shows the overall BRIC trend in growth. March came in with a slowdown of overall economic activity across the block of the largest emerging markets economies and this slowdown took place in the already weak growth environment. While the series remain on an upward trend established from the local low attained in July 2013, this trend is no longer convincing and since June 2014, there has been a pronounced downward sub-trend. This does not bode well for the global economy.