Friday, July 3, 2020

3/7/20: Services & Composite PMIs Q2 2020: BRIC

Note: charts below are not updated for full 2Q 2020 data on Global Services and Composite PMIs, which are yet to be reported for June and thus cover April-May period only. I will update these later.

Starting with Services sector activity:

BRIC Services index fell from a deeply recessionary 44.9 reading for 1Q 2020 to 40.9 in 2Q 2020, signalling accelerated rate of contraction in the sector across the four emerging markets economies. 1Q 2020 is now the second lowest quarter of index performance on the record, with 2Q 2020 coming in as the worst quarter on the record.

China was the strongest performer, with 2Q 2020 index at 52.6, four quarters high, and statistically in a relatively robust growth territory. Historically, this reading is consistent with GDP growth of 4-4.5 percent.

Russia recorded the second strongest reading, albeit at sharply recessionary 32.0 in 2Q 2020, down from the already recessionary 47.7 in 1Q 2020. 2Q 2020 is the lowest reading on record for Russian Services sectors. So being second wins no prizes.

Brazil Services PMI fell from a sharply recessionary 45.9 in 1Q 2020 to an even more depressing 30.3 in 2Q 2020. Needless to say, 2Q 2020 is the worst reading in Brazil Services PMI history.

India Services PMI has been signalling an outright collapse of economic activity in 2Q 2020, having fallen to 17.2 against 1Q 2020 reading of 54.1. The economy is literally paralysed.

In the entire history of BRICs PMIs, there has been only one other instance of two consecutive sub-50 readings - in 4Q 2008 and 1Q 2009, when the two-quarters average of the index was 47.7. Current index reading has !Q-2Q 2020 average of 42.6.

Given the above and the Manufacturing PMIs (covered here:, BRICs Composite Indices (note: I am using Markit data and relative GDP weights for each economy) have been woeful as well.

Brazil Composite average for 1Q 2020 was at 46.9. This fell to 31.8 in 2Q 2020. A recession in 1Q 2020 has accelerated dramatically into 2Q 2020 across all sectors of the economy.

Russia Composite average in 2Q 2020 was at 32.6, marginally better than that of Brazil, and well below already-recessionary reading of 47.7 in 1Q 2020. This, too, signals accelerating collapse of the economy.

India Composite index was in the expansionary territory at 54.8 in 1Q 2020 and it fell to an abysmally low 19.9 in 2Q 2020, indicating that the country economy came to a standstill in April-June. This is the lowest Composite index reading on record for any BRIC economy.

China Composite index fell from 52.6 in 4Q 2019 to a contractionary 42.0 in 1Q 2020, before recovering back to 52.6 in 2Q 2020. If treated symmetrically, this means that the Chinese economy did not fully recover to pre-crisis growth rates in 2Q 2020, but has made some progress on the path to recovery. There are multiple caveats that apply to this analysis, however, so treat it as purely directionally-indicative, as opposed to a measure of actual magnitudes.

As noted earlier, I will update these charts in subsequent posts, once we have Global PMIs reproted.

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