4/2/21: U.S. Labor Markets: America's Scariest Charts, Part 3

 In two prior posts, I covered two of America's Scariest Charts:

1. Continued Unemployment Claims (https://trueeconomics.blogspot.com/2021/02/4221-us-labor-markets-americas-scariest.html) and 
2. Labor force participation rate and Employment-to-Population ratio (https://trueeconomics.blogspot.com/2021/02/4221-us-labor-markets-americas-scariest_4.html)

Here, let's take a look at non-farm payrolls that measure employment levels in the economy.

In December 202, employment growth stalled. In fact, non-farm payrolls fell 328,000 in the last month of 2020 to 143,777,000, or 9,400,000 below pre-pandemic peak. December was the first month of declines in employment since April 2020, but employment growth was relatively slow already in November when the U.S. economy added 603,000 jobs, the slowest pace of recovery after July for the entire period of recovery of May-November 2020.

This evidence further reinforces the argument that labor markets conditions in the U.S. remain abysmal, prompting American workers to slip out of the labor force. 

6/1/21: BRIC: Composite Economic Indicators: 4Q 2020

• Manufacturing PMIs for BRIC economies for 4Q 2020 are discussed here: https://trueeconomics.blogspot.com/2021/01/4121-bric-manufacturing-pmis-4q-2020.html.
• Services PMIs are covered here: https://trueeconomics.blogspot.com/2021/01/6121-bric-services-pmis-4q-2020.html.

Now, Composite PMIs:

• Brazil Composite PMI rose from 51.6 in 3Q 2020 to 54.4 in 4Q 2020, marking second consecutive quarter of > 50.0 readings. Average 4 quarters PMI stands at 46.2, suggesting that Brazil's economy has not, yet, recovered fully from the Covid19 pandemic impact. Nonetheless, statistically, both 3Q and 4Q readings are signaling economic expansion and 4Q growth in Brazil's economy appears to be faster-paced than global (global composite PMI was at 53.3 in 4Q 2020).
• Russia Composite PMI is in a contraction territory, with 4Q 2020 reading of 47.7, down from 55.9 in 3Q 2020. Over the course of 2020, Russia Composite PMI averaged 46.0, the second weakest in the BRICs group. At 47.7, 4Q 2020 PMI is exactly in line with 1Q 2020 PMI.
• India Composite PMI rose from 45.9 in 3Q 2020 to 56.4 in 4Q 2020, signaling rapid bounce back in the economy, that, nonetheless continues to suffer from the pandemic-induced economic crisis. Full year 2020, Composite PMI average is at 44.3, by a distance, the lowest in the BRICs group. 
• China Composite PMI rose from 54.7 in 3Q 2020 to 56.3 in 4Q 2020, marking third consecutive quarter of economic growth, with full year PMI averaging 51.4, suggesting that the Chinese economy has now recovered fully from the Covid19 pandemic impact. 

Overall, three out of four BRIC economies posted 4Q 2020 Composite PMI above Global Composite PMI: Brazil, India and China, with Russia being the only BRIC economy posting both sub-Global and sub-50 Composite PMI reading at the end of 2020. Only one BRIC economy has, so far, signaled full recovery from the Covid19 crisis shock: China, with all other BRICs still recovering from the pandemic.

Given that both BRIC Manufacturing Sector Activity Index (54.9 in 4Q 2020) and BRIC Services Sector Activity Index (54.8 in 4Q 2020) are above Global Manufacturing (53.5) and Services (52.3) PMIs, BRIC economies as a group have supported global economic growth to the upside in 4Q 2020. In contrast, BRIC Manufacturing Activity Index outperformed Global Manufacturing PMI in 3Q 2020 (53.0 to 51.6), while BRIC Services Activity Index (51.0) underperformed Global Services PMI (51.4). 

6/1/21: BRIC: Services PMIs: 4Q 2020

 

BRIC's manufacturing PMIs for 4Q 2020 were covered here: https://trueeconomics.blogspot.com/2021/01/4121-bric-manufacturing-pmis-4q-2020.html. Now, to Services PMIs:

• Brazil Services PMI rose from 47.5 in 3Q 2020 to 51.4 in 4Q 2020, with aggregate 2020 levels of activity still significantly below 2019 levels. At 51.4, the index is barely statistically above 50.0 (95% confidence bound is 51.3). However, the latest quarterly reading is the first nominally above 50.0 after three consecutive quarters of sub-50 readings. 
• Russia Services PMI crashed in 4Q 2020 from 56.8 in 3Q to 47.7. Statistically, Russian services sector is contracting and it is contracting rapidly. In the entire 2020, there were three quarters of deeply sub-50 readings against one quarter of above 50.0 expansion. Services sector reading is basically identical to 47.6 recorded in Manufacturing sector, which means that in 4Q 2020 there was no 'comfort zone' in the Russian economy in terms of growth.
• India Services PMI rose significantly in 4Q 2020 compared to 3Q 2020, from 41.9 to 53.4.  However, this growth is unlikely to bring India's services activity anywhere near pre-Covid19 levels. 
• China Services PMI rose for the third consecutive quarter in 4Q 2020. In 2Q 2020, China's Services PMI was at 52.6, which increased to 54.3 in 3Q 2020 and to 57.0 in 4Q 2020. Nonetheless, it is still doubtful that Chinese services activities have fully recovered from the pandemic as of the end of 2020.
• Overall, BRIC Services Activity Index based on PMIs and respective GDP shares in the global economy rose for the second quarter in a row from 51.0 in 3Q 2020 to 54.8 in 4Q 2020. This marks some recovery from the Covid19 pandemic impact, although this recovery remains incomplete. BRICs have - as a group - outperformed Global Services PMI which rose from 51.4 in 3Q 2020 to 52.3 in 4Q 2020.

4/1/21: BRIC: Manufacturing PMIs 4Q 2020

Latest data for BRIC Manufacturing PMIs indicates three countries outperforming global rate of recovery in manufacturing sector, against one country (Russia) remaining in contraction territory and well below global growth mark.

On a quarterly basis,

• Brazil's Manufacturing PMI stood at 64.1 in 4Q 2020, up on 62.6 in 3Q 2020, marking the second highest and the highest reading on record. The contraction in 2Q 2020 (with PMI at 42.0) was sharp, but not as sharp as in 1Q 2009. By these comparatives, GFC-related contraction of 2008-2009 resulted in 4 quarters average reading of 45.1 and saw three consecutive sub-50 readings. The Covid-19 related contraction was stretched only across one quarter, with 4 quarters average of 54.8 in 2020. It is, genuinely, hard to reconcile these numbers with reality of the Covid-19 crisis.
• Russia Manufacturing PMI slipped to 47.6 in 4Q 2020 from 49.5 in 3Q 2020, marking sixth consecutive quarter of sub-50 readings. Statistically, Russian Manufacturing posted no growth (> 50 readings) in seven consecutive quarters. Over 2020 as a whole, Russian PMIs averaged abysmal 46.0, compared to the GFC and the Great Recession average of 2008-2009 of 44.7.
• India Manufacturing PMI was at 57.2 in 4Q 2020, up on 51.6 in 3Q 2020, and averaging 49.5 for the year as a whole. During the GFC and the Great Recession period, India's PMI averaged at 51.1. Unlike Brazil, India is yet to recover to pre-Covid-19 levels of activity.
• China Manufacturing PMI finished 2020 with a reading of 53.9, averaging 51.1 over 2020 as a whole, with overall PMIs performance suggesting that Chinese industrial producers have recovered from the Covid-19 pandemic by the end of 2020. China's Covid-19 experience has been more benign than the country contraction during the GFC and the Great Recession (46.9 average).

Global Manufacturing PMI stood at 53.5 in 4Q 2020 and an average of 49.3 over 2020 as a whole, against BRIC's Manufacturing Index (weighted by relative global GDP shares of the four economies) at 54.9 in 4Q 2020 and 50.5 for 2020 as a whole. In other words, BRICs have supported global growth to the upside during the Covid-19 pandemic. 

2/1/21: Covid19 update: BRIICS

 In previous posts, I covered Covid-19 updates for the last week of 2020 for:

• Worldwide trends: https://trueeconomics.blogspot.com/2021/01/2121-covid19-update-worldwide-numbers.html;
• Europe and the EU27: https://trueeconomics.blogspot.com/2021/01/2121-covid19-update-europe.html; and
• Countries with more than 250,000 cases: https://trueeconomics.blogspot.com/2021/01/2121-covid19-update-countries-with-250k.html.

Cumulative data for BRIICS (Brazil, Russia, India, Indonesia, China and South Africa) shows continued steady expansion of the pandemic in total cases and deaths:

• Currently, BRIICS account for 28.2% of all cases of Covid-19 in the world, and 25.3% of all deaths. This compares to these countries accounting for 45.3% of the world population.
• The pandemic has been relatively benign for this group of countries. If BRIICS were ranked as a stand-alone country within the group of 40 countries with more than 250,000 cases, BRIICS would have ranked 38th worst in terms of cases per 1 million of population, 37th worst in terms of deaths per capita, and 28th in terms of deaths per case. 
• BRIICS data, however is highly heterogeneous by country: 
• Brazil ranks 11th worst-hit country in the world in terms of infections rate, death rate per capita and mortality rate; 
• Russia ranks 28th;
• India ranks 38th;
• Indonesia 31st;
• China is unranked (officially, the country has fever than 250,000 cases, although overall robustness of the Chinese data is highly questionable); and
• South Africa ranks 22nd worst.
• No BRIICS country enters the league of 22 countries most-impacted by the pandemic (defined as countries with infection rate of 4% of population and higher).

Most current summary of key stats is below:

Now, to dynamics and trends.

BRIICS weekly case numbers are on the sustained rise, once again, since the trough achieved in week 45 which marked the end of the Wave 1 and the start of Wave 2 of the pandemic:

India and Brazil are showing robust and weakly-robust declines in weekly cases, while Russia and South Africa are showing robust increases. Other BRIICS are on a weak upward trend. Put frankly, my expectation is for a rise in India cases in weeks ahead as the new wave of the pandemic starts to take hold. Brazil being in a summer season is likely to have a longer lead time into the new wave.

Rather similar dynamics are taking place in deaths counts:

One key feature of the data is, of course, the clearly unreliable data from China that skews overall picture for the BRIICS group as a whole. If China's data was running at 0.75-0.9 of the average BRIICS rates, the country would have reported over 9.26 million cases (as opposed to the officially-reported 96,292 cases) and 183,400 deaths (compared to the officially-reported 4,771 deaths). It is worth noting here that these estimates reflect BRIICS rates that include official China statistics (downward bias to the estimates). What is quite amazing is not the actual numbers themselves, but the nearly total silence on the state of the Chinese statistics in much of the Western media, despite the order of differences between China and other BRIICS. Take a look at the comparative table here:

Russian stats: scrutinized left, right and center on every op-ed and news page of all major media outlets in the West are pretty much bank-on as expected: worse than average in infection rates, worse than average in deaths per capita, roughly (statistically) below average in terms of mortality rate. Similar for India. China's data is a complete and total outlier, and yet not a peep from the mainstream news. 

2/1/21: Covid19 update: Countries with > 250K cases

 

In previous posts, I covered worldwide trends for Covid19 pandemic evolution (https://trueeconomics.blogspot.com/2021/01/2121-covid19-update-worldwide-numbers.html) and pandemic developments in Europe and the EU27 (https://trueeconomics.blogspot.com/2021/01/2121-covid19-update-europe.html). Here, let's take a look at the set of countries with more than 250,000 confirmed cases.

As of week 52 of 2020, there were 40 countries in this group, accounting for 90 percent of the world total number of cases, 92 percent of the global deaths and 64 percent of the world's population. 

Tables below provide summary statistics for these countries:

You can click on the charts to magnify them.

The same data reported by regions and continents:

And a table of summary statistics:

Some noteworthy observations from the above:

• The U.S. is the worst performing major advanced economy when it comes to the pandemic trends: it ranks 2nd worst in the world in terms of its numbers of Covid19 cases per 1 million of population, 7th worst in the world in terms of its death rate per capita, but a reasonably-benign 25th in the world in mortality rate (deaths per positive test case). Using the three metrics mentioned, the U.S. ranks 6th worst performing country in the league of all countries with > 250,000 cases.
• The UK ranks even worse than the U.S. The country ranks 15th worst in the world in the rate of infections (Covid19 positive tests per capita), and 5th worst in deaths per capita and deaths per positive case. Across all three metrics, the UK ranks third worst in the world.
• Belgium ranks the worst major country in overall pandemic impact terms (cases per capita, deaths per capita and deaths per case), followed by Italy in the second place. The UK, as mentioned above ranks the third, Spain forth, Peru fifth, the US and Argentina tied in the sixth place, Hungary comes in 8th, Czechia 9th and France 10th. Thus, six out of the 10 worst hit countries in the world are EU27 members.
• In mortality terms (deaths per 1,000 cases), Mexico is the worst-performing country with 88.42 deaths per 1,000 positive cases; followed by Iran (45.56), Peru (37.19), Italy (35.12) and the UK (30.52). Overall, only 6 countries have mortality rates > 30 per 1,000 positive tests.
• There were 7 countries with more than 1,000 deaths per 1 million of population, and only 4 countries with infection rate of > 50,000 cases per 1 million of population.

Another summary table, showing relative contributions of each country to global cases and deaths, as well as their relative shares of total global population:

The above highlights once again the severity of the pandemic in the U.S., the UK and the EU27.

2/1/21: Covid19 update: Europe

 

Introducing new analysis for Europe and EU27 across the main metrics of the pandemic (see data note and coverage of worldwide trends here: https://trueeconomics.blogspot.com/2021/01/2121-covid19-update-worldwide-numbers.html). All data through week 52 of 2020.

Europe is continuing to experience Wave 2 of the pandemic, while EU27 is on the abating part of the pandemic curve, albeit with some volatility to the upside, especially in weeks 49-51. The above data is yet to fully reflect the beginning of the new strand of the virus (commonly referenced to the UK as the country of origin, although this appears to be a questionable reference point).

In terms of deaths, peak of the Wave 2 of the pandemic can now be timed to week 48, although in the last two weeks of 2020 there is some evidence emerging of re-amplification to the pandemic in Europe. 

Mortality rates have moderated at the peak of the Wave 2, hitting a trough at 23 per 1,000 cases, and staying at 23-24 since week 45:

Meanwhile, death rates per capita rose in the last week of the year to 797.4 per 1 million of population in EU27, up from 592.3 a month ago, and 651.5 in the Europe, up from 482.8 a month ago.

And a summary table of comparatives:

Overall, we can now call the peak of the Wave 2 of this pandemic at weeks 45 (in terms of new cases) and week 48 (in terms of deaths). That said, we can expect re-acceleration of both trends in weeks ahead as a new contagion wave develops following the last two weeks of the 2020. 

2/1/21: Covid19 update: Worldwide numbers

 

Starting the new year of data analysis for Covid19 pandemic, I have re-configured the charts and my database to reflect changes in ECDC reporting from daily to weekly aggregates, as reported through Thursday each week. The result is smoother data series, allowing for clearer analysis of the key trends. The downside, of course, is the lags in data reporting.

Please, note for the future: weekly data is subject to revisions by the ECDC.

First post, Worldwide figures and trends.

As of the last week of 2020, worldwide cases of positive tests have reached 80,177,400, with seventh consecutive week of above 4 million new cases reported on a weekly basis. The last week of the year data is subject to future revisions and reflects low accuracy of reporting due to holidays. Nonetheless, the pandemic shows no signs of de-acceleration globally in both cases and deaths.

As pointed out in the chart above, it is too early to call the peak of the Wave 3 of the pandemic, yet. Excluding the last week of the year, prior three weeks saw re-acceleration of the trend in new cases. Week 51 of 2020 saw the highest number of new cases on record at 4,534,601. 

Cumulated number of Covid19 related deaths reached 1,767,037 at the end of 2020, with week 52 marking the fifth consecutive week of > 70,000 new deaths per week. Week 51 marked the highest number of weekly deaths recorded to-date at 79,708. Again, given the nature of the data reporting during the last week of the year, it is too early to call the peak of the Wave 3 of the pandemic.

The mortality rate, measured as reported deaths per 1,000 cases continues to decline, but remains well above 20 deaths per 1,000 cases. The data is not, yet, reflective of the new (UK-originated) strand of the virus.

A summary table of the recent trends:

Based on monthly trends (4 weeks averages), the pandemic is showing no signs of abating in Africa, America (driven by the USA) and BRIICS, with signs of moderation off-the-peak in other parts of the world. In deaths, only Asia and Oceania are showing encouraging signs of the pandemic abating. 

Once again, even the tentative and weak signs of improvement in the pandemic dynamics mentioned above are subject to a lot of uncertainty, as the data covers the last week of 2020 and the Christmas period, both most likely contributing to underestimation of the pandemic severity.

Stay tuned for more analysis of the data.

15/12/20: Of herd immunity and vaccine coverage

Even with two vaccines now in the Emergency Authorization, we are many months away from reaching herd immunity levels, and worse, it is not entirely clear that we actually can reach that point at all. McKinsey research on Covid19 vaccines currently either authorized or close to authorization is dire (see https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/when-will-the-covid-19-pandemic-end). 

In basic terms, accounting for current immunity levels (effectively - infections-induced immunity) and assumed vaccines 95% effectiveness rate, but varying the assumed durability of the immunity gained from the vaccines, the U.S. will require 58-85% rate of vaccinations to reach herd immunity frontier (minimum level of immunity). One of the drivers for such high threshold for vaccinations is that, currently, no vaccine available is indicated for children.

While 58% threshold is hard, but feasible, 85% threshold is impossible, given the U.S. population heterogeneity in terms of attitude to vaccinations. American data on anti-vaccination advocates varies, but some recent indicators suggest that 23-25 percent of Americans are not willing to undertake Covid19 vaccinations (https://www.bostonglobe.com/2020/05/07/opinion/23-percent-say-they-wont-get-covid-19-vaccine/), and over time, the trend to avoid vaccinations has been rising prior to Covid19 pandemic (https://www.usnews.com/news/healthiest-communities/articles/2020-01-14/survey-fewer-people-now-support-vaccinating-their-kids-than-in-2001). A recent online survey of more than 2,000 U.S. adults, conducted by The Harris Poll found that 45 percent of Americans say something has caused them to doubt vaccine safety (https://www.infectioncontroltoday.com/view/45-percent-surveyed-american-adults-doubt-vaccine-safety).

Good luck getting far on the herd immunity curve with this crowd. 

Note: McKinsey assumes 95% efficacy of the vaccines. Pfizer-BioNTech vaccine efficacy of 95% estimate is based on small sample trials and is shown to be potentially  slightly lower (94%) for those in the age group of over 65. (see https://www.pfizer.com/news/press-release/press-release-detail/pfizer-and-biontech-conclude-phase-3-study-covid-19-vaccine). Actual efficacy range reported in the preliminary data from the larger study is not 95%, but 90.3% to 97.6% (see https://www.bmj.com/content/371/bmj.m4826). Thee administration of vaccines in all trials so far has been done in more tightly controlled environments than can be achieved in the case of mass distribution of these vaccines, and quality control in production and distribution of trial vaccines is probably much tighter too. Which suggests that the widely reported 95% figure is quite possibly an upper range of the efficacy estimates for the real world deployment. Using McKinsey's model, assuming 92% efficacy figure instead of 95%, the required rate of the U.S. population coverage of the vaccine to achieve minimum bound of herd immunity rises to 60%-88% range. 

Furthermore, assuming natural immunity levels of 10 percent (McKinsey use estimates of 0% to 25%) implies vaccine coverage requirement of around 72-75 percent of population. 

Yeah, I know, it gets tougher...  and so far, there are no tangible plans for any at scale distribution of the vaccines to the general population in the U.S. Not even my giant insurance provider can tell when and how this will be made available. Good luck if you are looking for one having no insurance, or having only basic catastrophic cover.

15/12/20: Impact of Covid19 on families & labor

 

Some interesting research on the less tangible differential impacts of Covid19 pandemic via McKinsey: families with children and families without children

In all categories, impact of the pandemic has been more severe on families with children. Predictably, as parents are facing increased demand on household work and higher pressure of increased density of living.

Closure of schools or flex-model (partial closure) are probably one of the key drivers:

Public safety during the pandemic might (rightly) be the overriding concern when it comes to designing strategic approach to managing the pandemic responses, but as the pandemic drags on, the above impacts are likely to cumulate. Something has to give. One example of appropriate response should be changing or suspending all traditional job performance assessment metrics, and doing so formally. Another point is that allowing increased mobility for smaller families, while keeping restrictions for larger families - an approach that is consistent with the argument that public health restrictions should be applied predominantly to families with greater vulnerabilities (e.g. families with children) is likely to widen the gap between the Covid19 impacts on families with kids and those without. A third point is that public supports should be extended and increased for families with children. 

These points might appear to be obvious in light of the above evidence, but they are by no means a norm in the public policies deployed in many places. 

In some areas, it is harder to design specific policy responses that can target the prevalence of the more severe impacts. For example, McKinsey reference a substantial gender gap in severity of the aforementioned effects: "Our survey data also show that more mothers struggle with household responsibilities and mental-health concerns compared with fathers (at 73 percent versus 65 percent, and 75 percent versus 69 percent, respectively, citing these challenges as either acute or moderate)." However, as McKinsey research shows, there are some responses that employers have been taking to try and mitigate overall negative impact of Covid19 pandemic on social and physical well-being:

The problem is that (1) the above measures are clearly not enough, and (2) the above measures are not targeted specifically to help families with children. Nor do all of these measures apply to all types of employees. In fact, the more vulnerable employees (termed contracts, contingent workforce, etc) are clearly put at a greater disadvantage by many of these measures. At least four of the ten measures listed in the chart above are clearly associated with increased risk of lower earnings and greater sense of precariousness in one's employment/career prospects. Something that is counter-productive in the pandemic over the long run, even if it appears to be accommodative in the short term. 

The implementation and effectiveness of the above measures are also wanting. Furthermore, the above responses tend to apply across the entire workforce, and do not reflect the fact that pressures of the pandemic are distributed disproportionately across different demographics (I mention families with children and women, but the same concern applies to POC households, LGBTQ+ households and so on):

Something has to give. And the public policy responses should lead, not lag, these developments.

Note: McKinsey's full research paper is available here: https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diverse-employees-are-struggling-the-most-during-covid-19-heres-how-companies-can-respond. 

7/11/20: BRIC: Composite Economic Indicators for October

 I covered BRIC Manufacturing and Services PMIs for October in two earlier posts (see here https://trueeconomics.blogspot.com/2020/11/51120-bric-services-pmis-october.html), so now, Composite PMIs:

• Brazil Composite PMI rose to 55.9 in October, compared to 51.6 in 3Q 2020, and currently sits above Global Composite PMI of 53.3. The latest increase in PMI is a robust signal of partial recovery, marking the third consecutive month of > 50.0 readings that followed five consecutive months of contraction. 
• Russia Composite PMI was the weakest of all BRIC PMIs, falling to 47.1 in October, compared to 55.9 in 3Q 2020, and marking the first sub-50 reading in four months.
• India Composite PMI was the strongest amongst the BRIC PMIs rising to 58.0 in October against 45.9 in 3Q 2020. Overall, Indian economy is only starting to inch out of the recession that was marked by two consecutive quarters of sharply contractionary PMIs.
• China Composite PMI posted an increase to 55.7 in October relative to 54.7 in 3Q 2020, marking the start of the third quarter of growth. Overall, the latest reading indicates that Chinese economy has completed its recovery from 1Q 2020 recession.

Overall, BRIC Manufacturing indicator (55.2 in October, compared to 53.0 in 3Q 2020) and Services indicator (54.9 in October, compared to 51.0 in 3Q 2020) have posted better performance than their Global counterparts (53.0 and 52.9, respectively for October). BRIC Manufacturing indicator is now outperforming Global Manufacturing PMI in 8th consecutive quarters, and BRIC Services indicators is running above Global Services PMI for the first time after posting poorer performance in 3Q 2020.

5/11/20: BRIC: Services PMIs October

In the earlier post, I covered BRIC economies manufacturing PMIs for October: https://trueeconomics.blogspot.com/2020/11/31120-bric-manufacturing-pmis-october.html. Now, leet's take a look at Services PMI.

As the chart above illustrates:

• Brazil Services PMI rose from 47.5 in 3Q 2020 to 52.3 in October. Prior to October, Brazil's services sector was in a contractionary territory for three consecutive quarters. October marks the second month of above 50.0 readings, although statistically-speaking, September reading was indistinguishable from 50.0 stagnation / zero growth level.
• Russian Services PMI posted a sharp contraction, falling from 56.8 in 3Q 2020 to 46.9 in October. Russia enjoyed just three months of > 50.0 readings in July-September 2020, implying that the economy is nowhere near a V-shaped recovery from the pandemic and that things are getting worse, not better in the services sectors. Even worse dynamics apply to Manufacturing where Russia has not seen sustained > 50 readings since March 2019.
• India Services PMI rose to 54.1 in October, marking the first month of above 50.0 readings since February 2020. Given cumulative nature of the PMIs, October rebound is nowhere near being sizeable enough to start closing the pandemic-induced drop-off in economic activity. India's services have now posted seven months of contraction in 2020, compared to four months for Manufacturing. October marks the first month since February with both indices above 50.0.
• Chinese Services PMI rose to 56.8 in October, compared to 54.8 in September, marking 6th consecutive month of both Manufacturing and Services PMIs above 50.0 line. 

Overall, BRIC Services Activity Index (a measure of Services sectors activity calculated by me based on monthly Markit PMI data and country-specific share of the world GDP, PPP-adjusted) rose to 54.9 in October compared to 51.0 in 3Q 2020, marking a second month of > 50.0 readings and accelerating growth momentum. October BRIC reading is in excess of the Global Services PMI reading of 52.9, implying that as a group, BRIC economies are contributing positively to global economic growth momentum, although both Brazil and Russia are pushing BRIC reading down, compared to Global Services PMI.

3/11/20: BRIC: Manufacturing PMIs October

 BRIC's manufacturing PMIs are out for October, marking the start of Q4 2020. Overall, the results reinforce Q3 2020 trends highlighted here: https://trueeconomics.blogspot.com/2020/10/141020-bric-manufacturing-pmis-q3.html. 

• Brazil posted further acceleration in the recovery momentum with Manufacturing PMI rising to 66.7 from 3Q 2020 62.6. 3Q 2020 was the historical record quarter for Brazil's Manufacturing PMI readings. Brazil's Manufacturing PMIs have now strengthened every month since May 2020, the last month of sub-50 readings.
• In contrast to Brazil, Russia Manufacturing PMI slipped again in October, hitting a 5-months low at 46.9, down from 48.9 in September and well below already poor 49.5 reading for 3Q 2020. Prior to 4Q 2020, Russia clocked five consecutive quarters of Manufacturing PMIs below 50.0 mark.
• China Manufacturing PMI rose from 53.0 in 3Q 2020 to 53.6 in October. China's latest reading is on-trend, with rising PMIs for the third quarter in a row. 
• India Manufacturing PMI stood at 51.6 in 3Q 2020 and this improved to 58.9 in October, marking a major acceleration in growth conditions. 
• Three of the BRIC economies have posted October Manufacturing PMI readings more robust than Global PMI reading of 53.0. Thus, overall BRIC Manufacturing activity index stood at 55.2 in October, well ahead of 53.0 reading for 3Q 2020. The last time BRIC Manufacturing activity index was below that of the Global Manufacturing PMI was 4Q 2018.
• Russia was the only BRIC economy to continue posting recessionary PMI reading in its manufacturing sector. 

27/10/20: Identity & Risk: My Keynote Talk

My recent keynote address to the pTools Virtual Conference 2020: Identity & Risk: Financial Services in a Time of Transformation & Uncertainty (22nd October 2020) is now available at: https://vimeopro.com/user12978768/ptools-virtual-conference-2020. 

26/10/20: ifo Institute: German Economic Conditions Deteriorated in October

ifo Institute's latest Business Climate survey data for Germany is pointing to continued weakness in the recovery momentum:

Notably, all four sectors covered remain under water:

Current conditions are deteriorating month-on-month in two sectors, expectations have deteriorated in all four sectors.

24/10/20: America's Scariest Charts: Duration of Unemployment & Employment Index

Two previous posts covered some core labor markets data for the U.S.:

• Non-farm payrolls through September 2020: https://trueeconomics.blogspot.com/2020/10/241020-americas-scariest-charts-non.html and
• Labor Force Participation rate and Employment-to-Population ratio: https://trueeconomics.blogspot.com/2020/10/241020-us-labor-force-participation.html

Here, let's take a look at the weekly (higher frequency) data unemployment claims.

First, initial unemployment claims, with data coverage through the week of October 17th:

The above chart shows 1-month cumulative initial unemployment claims, smoothing some of weekly volatility in the series.

Current reading stands at 3,194,750 which is above the 2008-2011 crisis peak of 3,169,786 and only slightly below all-time pre-COVID19 high of 3,313,000 attained in January 1975.

In absolute level numbers, preliminary first-time claims for the week of October 17, 2020 stand at 756,617 which is still 3 times the rate of first-time claims filings in the last week before COVID19 pandemic onset (March 14, 2020). The good news is, preliminary estimate for the new claims for the week of October 17 suggest a decline in new claims filings of 73,125 on week prior - the fastest rate of reductions in 10 weeks. However, overall average weekly decline in first-time claims over the last 10 weeks has been rather unimpressive at 8,212. At this rate of improvement, it will take almost 62 weeks to draw current first-time claims down to the levels seen in the last pre-COVID19 week.

In line with the crisis timing, average duration of unemployment is climbing up, too:

Based on monthly data through September 2020, average duration of unemployment is about to hit pre-crisis average in October. This sounds like a good thing, until you realise that the duration of unemployment fell to historically low levels as COVID19 crisis unfolded because of the unprecedented rate of jobs losses and unemployment claims increases (see net chart below). It remains to be seen how it will behave in months ahead. 

Past three recessions have been associated with increasing average duration of unemployment through recovery periods. They have also been associated with longer periods of elevated duration. In fact, in the last three recessions, average duration of unemployment never reached pre-recession levels, implying that long-term unemployment got worse in every recovery period since 1990 on. If this trend is consistent with the COVID19 recession, U.S. long term unemployment duration will rise once again. 

For the last chart, consider employment index dynamics though September 2020:

Despite the headline 'historically fast' recovery, actual employment remains in dire state, with current dynamics through September 2020 indicating the third worst employment performance in the history of the modern economy. Based on the 3-months average gains in seasonally-adjusted employment, it will take us another 8 moths before we regain pre-crisis peak employment levels, implying the 5th fastest recovery in employment in history. Based on September rate of improvement, the process will take another 16 months, which would make the current recovery the fifth slowest on record. Based on the dynamics of change in the jobs recovery since May 2020, we can expect the jobs recession to last 45 months, which would make it the 3rd worst recession in history. So far, the average rate of decline in the jobs gained per month during the recovery is 15% per month. 

In the Great Recession, it took the economy 76 weeks to recover from trough of the recession to pre-recession peak employment. The average monthly rate of recovery from the trough until regaining pre-recession peak was 0.128% per month. This would put the month when we would recover from the COVID19 pandemic to July 2025, making the COVID19 pandemic a second worst recession in history after the Great Recession.

24/10/20: America's Scariest Charts: Non-farm Payrolls

In the previous post, I covered data for the U.S. Labor Force Participation and Employment to Population Ratios (see https://trueeconomics.blogspot.com/2020/10/241020-us-labor-force-participation.html). Now, let's update the data for Total Nonfarm Payrolls through September:

At the end of September, total non-farm payrolls stood at 141,855,000 - up 1,137,000 on August, and still down 11,322,000 on pre-COVID19 peak. We are now just over half-way to the recovery from COVID19 trough of 130,317,000 reached in April 2020. Since reaching trough, non-farm payrolls rose, on average, at a monthly rate of 2,308,000, which means that the latest increase over the month of September has been substantially slower than the average rate of recovery. 

At September rate of jobs recovery, it will take us almost 10 months to regain pre-COVID19 peak. 

Current levels of payrolls are consistent with February 2016 levels, implying that even after we are still missing some 4.5 years worth of jobs creation. 

Here is a genuinely scary table, highlighting the fact that in the COVID19 pandemic, the U.S. sustained jobs losses of the combined magnitude equivalent to those suffered in all recessions from 1980 through the Great Recession:

And while the recovery is clearly under way, broader indicators of the jobs markets trends are still pointing to a horrific aftermath of the first of this pandemic, with the second wave now in full swing (see more on this here: https://trueeconomics.blogspot.com/2020/10/231020-covid19-update-us-vs-eu27.html) 

14/10/20: BRIC: Composite economic activity indicators Q3 results

 

We covered in detail strong recovery in BRIC Manufacturing PMIs (https://trueeconomics.blogspot.com/2020/10/141020-bric-manufacturing-pmis-q3.html) and fragile recovery in Services PMIs (https://trueeconomics.blogspot.com/2020/10/141020-bric-services-pmis-q3-results.html). Here is a summary chart:

Now, let's take a look at BRIC Composite PMIs for 3Q 2020:

Brazil Composite PMI ended Q3 2020 on a reading of 51.6 - an improvement on 31.8 in 2Q 2020. Brazil's Composite PMIs have run sub-50 recessionary reading in 1Q and 2Q 2020, returning to growth in 3Q 2020, albeit at the levels not consistent with a V-shaped recovery.

Russia Composite PMI stood at a strong 55.9 reading in 3Q 2020, up on 32.6 in 2Q 2020 and signaling an end to 2 consecutive quarters of sub-50 readings. This marks the fastest pace of growth since 1Q 2017, but is also consistent with the levels of current activity being still below pre-COVID19 pandemic period. 

India Composite PMI remained in recessionary territory in 3Q 2020 at 45.9, an improvement on 19.9 in 2Q 2020. Overall, Indian economy has suffered the sharpest hit from the pandemic, compared to all other BRICs. It is continuing to exhibit recessionary dynamics to-date. 

China Composite PMI ended 3Q 2020 at 54.7, marking the second consecutive quarter of recover (2Q 2020 reading was 52.6). 3Q 2020 reading is the highest since 1Q 2020, and suggests that the Chinese economy is getting close to recovery in its activity levels to pre-pandemic position. 

Overall, BRIC block activity indices imply lagging momentum in the recovery in services, and faster than global pace of recovery in manufacturing. Statistically, BRIC growth momentum in 3Q 2020 is within historical average, however, growth dynamics in 1Q and 2Q 2020 were significantly below historical averages, which implies that 3Q 2020 PMIs indicate incomplete or only partial recovery in the BRIC economies post-pandemic so far.

14/10/20: BRIC: Services PMIs Q3 results

 

BRIC Manufacturing has rebounded strongly from thee pandemic lows, as covered in this post here: https://trueeconomics.blogspot.com/2020/10/141020-bric-manufacturing-pmis-q3.html. Services PMI for the BRIC economies signal similar, albeit weaker rebound in July-September:

Brazil Services PMI stayed in the recession territory in 3Q 2020, with index reading coming in at 47.5, up on 30.3 in 2Q 2020, but still marking a third consecutive quarter of sub-50 readings. Put simply, unlike manufacturing that is showing rather incredible signs of the recovery, Brazil's services sectors continue to show ongoing contraction, building on 6 consecutive months of contracting activity through August 2020. September monthly reading at 50.4 is statistically indistinguishable from zero growth line of 50.0. In summary, Brazil's services sector is not in a recovery so far.

Russia Services PMI posted very strong recovery signals in 3Q 2020, although September reading slipped to 53.7 (fast growth) from blistering 58.5 and 58.2 in July and August, respectively. 3Q 2020 Russia Services PMI was at 56.8 marking a sharp turnaround from 36.0 in 2Q 2020. This is the fastest pace of quarterly expansion since 1Q 2017.

India Services PMI remains in contraction, with 3Q 2020 reading of 41.9, an improvement on sharper rates of deterioration in 2Q 2020 at 17.2. September marked seventh consecutive month of sub-50 readings in Services sector in India.

China Services PMI came in at 54.3 in 3Q 2020, up on 52.6 in 2Q 2020, marking second consecutive quarter of recovery from the pandemic lows of 1Q 2020 when the index fell to 40.4. 

Overall, BRIC Services Activity Index - an index compiled by me based on GDP shares and Markit monthly PMI data - rose from 40.4 in 2Q 2020 to 51.0 in 3Q 2020. Given the nature of PMIs as signals of monthly changes in activity, 3Q 2020 reading is consistent with the BRIC block services sectors recovering only partially from the pandemic lows. BRIC Services Activity Index ended 3Q 2020 at the levels slightly below the Global Services PMI which stood at 51.4. Global services sectors are also showing more rapid rate of quarterly recovery, rising from 35.6 in 2Q 2020 to 51.4 in 3Q 2020.

14/10/20: BRIC: Manufacturing PMIs Q3 results

 

BRIC - Brazil, Russia, India and China - economies have posted a significant improvement in Q3 Purchasing Managers Indices in Manufacturing sector:

Brazil Manufacturing PMI rose to 62.6 - the highest on record in 3Q 2020 following 42.0 recessionary reading in 2Q 2020. This is a massive rebound from pandemic lows, and the level of 3Q reading puts into question validity or accuracy of the surveys. On a monthly basis, the index was at 64.7 and 64.9 in August and September. Brazil's manufacturing index was at sub-50 readings in March-May 2020, with a reasonably credible rebound in June and July. August and September readings are literally out of the ball park, both in terms of historical comparatives and in terms of past turning points from recessions to expansions. 

Russia Manufacturing PMI treaded water in 3Q 2020, swinging from 48.4 in July to 51.1 in August and back to 48.9 in September. As the result, Russia posted sub-50 reading for 3Q 2020 at 49.5, the only BRIC economy in this position. This marks 5th consecutive quarter of sub-50 PMIs. Statistically,  the last time Russian manufacturing was in the expansion territory was in 1Q 2019. 

India Manufacturing PMI rose strongly in Q3 2020 to 51.6, well above 35.1 recession trough in Q2 2020. However, statistically, current reading signals relatively weak recovery. September monthly index came in at more robust 56.8, suggesting that the economy may be gathering some momentum and recovery may be accelerating. 

China Manufacturing PMI was basically unchanged at 53.0 in September compared with 53.1 in August. 3Q 2020 PMI is at 53.0, which is an improvement on statistically zero growth reading of 50.4 in 2Q 2020. China's Manufacturing PMI numbers are historically less volatile, so 53.0 marks the fastest pace of expansion since 4Q 2010.

Overall, GDP-weighted BRIC Manufacturing Activity Index stood at 53.0 in 3Q 2020, above the Global Manufacturing Index (51.6) and up on 45.0 in 2Q 2020.