Tuesday, May 5, 2015

5/5/15: BRIC Manufacturing PMI: Further Growth Slowdown in April

BRIC manufacturing PMIs (Markit) are out for April, and the signs are poor in terms of economic growth prospects for the block of the four largest emerging economies.

  • Brazil manufacturing PMI came in at 46.0 in April, down from already abysmal 46.2 in March, singling deepening and accelerating contraction. This the the third consecutive month of Manufacturing PMI below 50.0. 3mo average is at 47.3 and previous 3mo average (through January 2015) is at 49.9. The weakness in Brazil manufacturing sector performance is not new: in 3mo through April 2014 the index reading was just 50.1. Weak growth or contraction (below 51.0) has been recorded every month since March 2013. As of April, Brazil has posted the lowest monthly and 3mo average readings for Manufacturing PMIs for all BRIC countries.
  • Russian Manufacturing PMI posted a slight improvement in April, rising to 48.9 from 48.1. Nonetheless, April was the fifth consecutive month of sub-50 readings and the 'improvement' is reflective of a slowdown in the rate of contraction, not a reversal of contraction. 3mo average through April is at 48.9 which is still worse than the 3mo average through January 2015 (49.4) and only marginally better than 3mo average through April 2014 (48.4). Last time Russian manufacturing PMI reading was in healthy territory was November 2014 when it posted a surprising reading of 51.7, but overall, weak performance can be traced back to July 2013.
  • Chinese Manufacturing PMI continued to post contraction in the sector coming in at 48.9 in April, marking worsening in the growth conditions compared to 49.6 reading in March and the second consecutive month of sub-50 readings. 3mo average is now at 49.7, marginally weaker than 49.8 3mo average through January 2015. Current 3mo average is, however, stronger than 48.2 average for the 3 months through April 2014.
  • India was the only BRIC economy that managed to sustain above-50 reading for the Manufacturing PMI. However, at 51.3 in April, the PMI is still down on 52.1 in March. This marks 18th consecutive monthly above-50 reading for the series.

Overall, April data indicates significantly adverse conditions in BRIC manufacturing, with Brazil being by far the worst performer in the group both in terms of monthly reading and 3mo average. As the chart above shows, excluding India, BRIC Manufacturing PMIs trend to the downside from mid-2014 levels with Brazil readings at the worst levels since September 2011, Russia continuing to perform at the levels consistent with the worst economic slowdown since October 2008-July 2009, China showing renewed weaknesses consistent with overall zero growth trend present since around Q2 2013. India bucked the BRIC pattern by posting a positive growth trend since Q4 2013.

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