8/9/20: BRIC: Manufacturing PMIs

Updating BRIC Manufacturing PMIs - with some delay (sorry, start of the academic year):

 These are quarter averages, with July-August for 2020. And wee have:

• A mad print for Brazil. In the last four months, Brazil Manufacturing PMI went from 38.3 in May to 51.6 in June, 58.2 in July and a totally incredible 64.7 in August. As PMIs are indicators of month-on-month activity changes, and not comparable year-on-year, all we know is that there is a massive boom in the sector from the lows of the COVID19 pandemic recession. But we do not know if we are close to pre-COVID19 levels or close to the pre-COVID19 trends or anywhere, specifically. Still, if 64.7 reading in August is a genuine indicator of activity, we are seeing real recovery in the economy. In fact, July and August are now two highest PMI readings months in history of the series. On a quarterly average basis, we are at 61.5 so far for 3Q 2020 which is the highest in history, with the prior historical high registered in 1Q 2010 at 56.3. Current trough-to-peak swing in Manufacturing PMI for Brazil for the COVID19 period is incredible 19.5 points.
• Russia, in contrast, continues to show signs of weaknesses in the Manufacturing sector, with 3Q 2020 PMIs so far running at 49.8 - statistically reflecting zero growth. Notionally, this marks the sixth consecutive quarter of PMIs below 50 in nominal terms and a seventh consecutive quarter at or below 50. Current trough-to-peak swing in Manufacturing PMI for China for the COVID19 period is sharp at 10.8 points, and this before we establish any recovery (over 50.0) momentum.
• China Manufacturing PMI is currently averaging 53.0 for 3Q 2020, the highest reading since 4Q 2010. China posted statistically zero growth - PMI at 50.4 in 2Q 2020, on foot of a significant, but not catastrophic, contraction in 1Q 2020 at 47.2. Current trough-to-peak swing in Manufacturing PMI for China for the COVID19 period is relatively moderate at 5.8 points.
• India Manufacturing PMI for 3Q 2020 is at 49.0, having risen from the recession trough of 35.1 in 2Q 2020, and trough-to-peak swing is at 13.9 points.

Overall, BRIC Manufacturing activity index is at 52.3 as of the first two months of 3Q 2020, up from 45.0 in 2Q 2020 and 49.1 in 1Q 2020. The trend is for a substantial improvement over time, with the trough-to-peak swing currently at 7.3 points.The index is outperforming Global Manufacturing PMI that currently sits at 51.2 for 3Q 2020, up 7.6 points on the trough in 2Q 2020. 

Stay tuned for BRIC Services PMIs and Composite PMIs next.

4/8/20: BRIC: Manufacturing PMIs

BRIC Manufacturing PMIs are out for July and the numbers are bizarre:

Brazil is going parabolic? The country is absolutely devastated by COVID19, although the Government is hell-bent on Malthusian 'let them mind their own health or die' tactic. And its Manufacturing PMI came in at a world-leading 58.2 in July, up on weak growth-signalling 51.6 in June. This is the highest monthly reading on record for Brazil. It is such an outlier, in terms of historical record, in terms of recent pre-COVID19 trends and in terms of international comparatives, one is wondering if the data was compiled by someone with some serious fever.

On the mid-range of surprises, China's Manufacturing PMI came in at 52.8 in July compared to 51.2 in June. This marks second month of statistically positive growth-supporting PMI. China's Manufacturing PMIs are generally rather subdued, so 52.8 is the highest the index has been since January 2011. The outrun is not surprising, however, given that China managed to 'officially' contain COVID19 pandemic earlier in 2Q 2020 and moved to reopen its economy. Unlike in the case of Brazil, China's Manufacturing PMIs have been consistent (dynamically) with its Services PMIs.

On the downside surprise, Russia Manufacturing PMI fell in July to 48.4 from 49.4 in June. The index has now been nominally below 50 mark since May 2019, although June reading was not statistically different from 50.0. Still, July reading clearly shows deteriorating conditions in Russian manufacturing sectors.

On an even bigger downside surprise, India Manufacturing PMI fell to 46.0 in July down from 47.2 in June, marking fourth consecutive month of sub-50 readings. India's reading in July was the third lowest for any month since January 2009.

Overall, GDP-weighted BRIC Manufacturing PMI - computed by me using Markit countries-level data - stands at 51.1 in July, and improvement on 45.0 reading recorded over 2Q 2020.

1/7/20: Manufacturing PMIs Q2 2020: BRIC

BRIC economies reported their June manufacturing PMIs, so we can update Q2 2020 data. Here is the chart:

Despite improving PMIs in all BRIC economies through June 2020, quarterly readings remains deeply recessionary in all BRICs except for China.

• Brazil Manufacturing PMI averaged 40.6 in 2Q 2020 down from 1Q reading of 50.6. Brazil Manufacturing sector growth was slowing down from the start of 4Q 2019 and was showing anaemic growth (statistically, zero growth) in 1Q 2020 before COVID19 restrictions kicked in. June 2020 monthly reading rose, however, to 51.6 - signalling pretty robust growth on a monthly basis for the first time since the end of February. Some good news, but not enough to lift 2Q 2020 average above 50.0 mark.
• Russia Manufacturing PMI remains below 50.0 in June, as it did consecutively since the end of April 2019. This marks 14 months of continued contraction, only accelerated by COVID19. Quarterly PMI for 2Q 2020 is deep under water at 39.0 - the worst reading in history, matching that of the lows of the 2009 recession in 1Q 2009. June monthly uptick to 49.4 is still leaving Russian Manufacturing index below zero growth mark of 50.0. 
• India Manufacturing PMI rose from 30.8 in May to 47.2 in June 2020, but remains well below zero growth line. Quarterly index is now at 35.1 for 2Q 2020, which is an all-time low. 
• China Manufacturing PMI was the only BRIC index to reach into positive growth territory in 2Q 2020, at 50.4. Statistically, this reading is indifferent from zero growth conditions in the sector, however. 

Overall, GDP-shares weighted BRIC Manufacturing index is at 45.0 in 2Q 2020, down from 49.1 in 1Q 2020. Not as bad as 4Q 2008 - 1Q 2009 readings of 43.1 and 43.7, respectively, but bad. Still, BRICs as a group managed to sustain less manufacturing decline than the Global Manufacturing index which collapsed to 43.6 in 2Q 2020 from 48.4 in 1Q 2020.

19/4/20: BRICs PMIs Q1 2020

Coronavirus early impact on the global economy is quite evident now through the BRIC economies PMIs that cover the first two months of the pandemic:

One country breaking the ranks so far on this is India, where the pandemic was registered only in mid-March, resulting in 'distancing' restrictions being imposed only in the second half of the last month of the 1Q. 

Even accounting for India's relatively lagged impact of the COVID19, BRIC quarterly PMIs (note: I use simple average for each country monthly PMIs and weigh these by each BRIC economy's respective share of the Global GDP, adjusted for differences in prices and exchange rates):

• BRIC Composite Manufacturing PMI for 1Q 2020 came in at 49.1 - statistically significantly below 50.0, indicating a recession, and marking the weakest reading since 1Q 2009. Nonetheless, BRIC Manufacturing PMI was above the Global Manufacturing PMI of 48.4.
• BRIC Composite Services PMI for 1Q 2020 was at 44.9, weakest on record, and below Global Services PMI of 45.6. BRIC reading for 1Q 2020 was consistent with a recession.
• Global Composite PMI at 45.9 was the weakest on record and basically in-line with the BRIC's average of Manufacturing and Services PMIs. Brazil Composite PMI at 46.9 and Russia Composite PMI at 47.7 were recessionary, but better performing that the Global Composite PMI, while India's Composite PMI of 54.8 was completely out of alignment with the Global economy and the rest of the BRICs. China Composite PMI of 42.0 was weaker than the Global Composite PMI owing to the earlier start of the pandemic in China.

5/1/20: BRIC Manufacturing PMIs 4Q 2019

As global manufacturing sector activity barely stayed above the recession line in 4Q 2019, BRICs manufacturing PMIs indicated a cautious upswing in activity, with exception for Russia and India. Here are the core details:

• Brazil's 4Q 2019 Manufacturing PMIs averaged 51.8, statistically unchanged on 3Q 2019 figure of 51.9. Both 3Q and 4Q readings were statistically above 50.0, indicating modest growth, and above historical average of 50.3. Nonetheless, 4Q 2019 reading was the second lowest in six consecutive quarters.
• Russia posted its second consecutive quarter of recessionary growth readings for manufacturing sector, with quarterly average PMI slipping to 46.8 in 4Q 2019, down from 48.2 in 3Q 2019, making 4Q contraction the sharpest since 2Q 2009. All in, the last time Russian manufacturing sector posted statistically above 50.0 reading was in 1Q 2019. The signal here is severely negative to overall growth prospects for the Russian economy for the entire 2019 and a major concern for the 1H 2020 dynamics. 
• China manufacturing PMI surprised to the upside in the last quarter of 2019, rising from 50.6 in 3Q 2019 (a reading statistically indistinguishable from zero growth 50.0 mark) to 51.7 in 4Q 2019 (a reading indicating moderate expansion, compared to the historical average of 50.8). Statistically, Chinese manufacturing has not been in an expansion mode over 3Q 2018 - 3Q 2019 period, which makes 4Q 2019 reading an important signal of a potential turnaround.
• India manufacturing PMI averaged 51.5 in 4Q 2019, slightly down on 51.8 in 3Q 2019. This is the weakest level since 3Q 2017, but statistically it is still indicative of expansion in the sector.

Overall, BRIC Manufacturing PMI (based on each country share in global GDP) has improved from 50.7 in 3Q 2019 to 51.2 in 4Q 2019, marking the fastest rate of the group's manufacturing sector expansion 1Q 2018 and the second consecutive quarter of the index being statistically above the 50.0 zero growth line.

Globally, manufacturing sector growth conditions improved from 49.5 in 3Q 2019 to 50.1 in 4Q 2019, although statistically, no reading from 2Q 2019 onwards was significantly above or below the zero growth 50.0 line.

As the chart above clearly shows, Global Manufacturing sector activity remains extremely weak. On-trend, more recent BRICs Manufacturing sector growth is above that of the Global PMI signal, but both show weaknesses. 

3/5/19: Global and BRIC Manufacturing PMIs signal ongoing growth declines

The latest data, released this week by Markit under their PMI headings, shows that manufacturing sector global slowdown has entered into its 6th consecutive quarter in the first month of 2Q 2019. In line with this momentum, BRIC economies overall, with exception (for now) of Russia and China have also posted slower growth in April compared to 1Q 2019 average:

Russia posted slightly more upbeat growth in April at 51.8 compared to 1Q 2019 average growth of 51.3. China has barely bounced back into growth in April 2019 compared to 1Q 2019 reading of 49.7. Brazil slowdown was marked, with PMI for Manufacturing down from 53.0 in 1Q 2019 to 51.5 in April, while India suffered an even more significant fall-off in activity, with Manufacturing PMI falling from 1Q 2019 average of 53.6 to April reading of 51.8.

Global Manufacturing sector PMI averaged 50.7 in 1Q 2019, and in April it fell to 50.3, statistically implying zero growth in the sector. One has to go back to 3Q 2013 to see a reading at or below April 2019 levels. 

4/4/19: BRIC Manufacturing PMIs for 1Q 2019: In Line With Global Growth Slowdown

Q1 2019 Manufacturing PMIs for BRIC economies came in as effectively flat on 4Q 2018 and relatively in line with the collapsing Global Manufacturing PMI.

Brazil Manufacturing PMI averaged 53.0 in 1Q 2019, a gain on 52.1 in 4Q 2018, and the highest quarterly reading since 1Q 2011. 

Russia Manufacturing PMI average for 1Q 2019 was at 51.3, down from 51.9 in 4Q 2018, but still the second highest in 5 quarters. 

China Manufacturing PMI was at 49.7 in 1Q 2019, the first sub-50 reading for a quarterly average since 2Q 2016, and the fourth consecutive quarter of declining PMIs.

India Manufacturing PMI was at 53.6 - a gain on 53.4 in 4Q 2018, and the highest reading since 4Q 2012.

GDP-weighted BRIC Manufacturing PMI averaged 51.0 in 1Q 2019, marginally down on 51.2 in 4Q 2018 and singling slower growth than 51.5 reading for 1Q 2018.

Meanwhile, Global Manufacturing PMI averaged 50.7 in 1Q 2019, down significantly on 51.8 in 4Q 2018 and marking the fourth consecutive quarter of declining growth in global manufacturing. 

CHART

9/10/17: BRIC Manufacturing PMIs 3Q 2017: Lagging Global Growth

With Markit Economics finally releasing China data for Services and Composite PMIs, it is time to update 3Q figures for Manufacturing and Services sectors PMI indicators for BRIC economies.

Summary table:

As shown above, Manufacturing PMIs across the BRIC economies trended lower over 3Q 2017 in Brazil and India, when compared to 2Q 2017, while trending higher in Russia and China.

• Brazil posted second lowest performance for the sector in the BRIC group, barely managing to stay above the nominal 50.0 mark that defines the boundary between growth and contraction in the sector activity. Statistically, 50.6 reading posted in 3Q 2017 was not statistically different from 50.0 zero growth. And it represents a weakening in the sector recovery compared to 50.9 reading in 2Q 2017. Brazil's Manufacturing sector has now been statistically at zero or negative growth for 18 quarters in a row.
• Meanwhile, Russian Manufacturing PMI rose from 51.2 in 2Q 2017 to 52.1 in 3Q 2017, marking fifth consecutive quarter of expansion in the sector (nominally) and fourth consecutive quarter of above 50.0 (statistically). With this, Russia is now back at the top of Manufacturing sector growth league amongst the BRIC economies. However, 3Q 2017 reading was weaker than 4Q 2016 and 1Q 2017, suggesting that the post-recession recovery is not gaining speed.
• China Manufacturing PMI rose in 3Q 2017 to 51.2 from zero growth of 50.1 in 2Q 2017. The dynamics are weaker than in Russia, but similar in pattern, with 3Q growth being anaemic. In general, since moving above 50.0 mark in 3Q 2016, China Manufacturing PMIs never once rose above 51.3 marker, indicating very weak growth conditions in the sector.
• India's Manufacturing PMI tanked again in 3Q 2017 falling to 50.1 (statistically - zero growth) from 51.7 in 2Q 2017. Most recent peak in Manufacturing activity in India was back in 3Q 2016 and 4Q 2016 at 52.2 and 52.1 and these highs have not been regained since then. India's economy continues to suffer from extremely poor macroeconomic policies adopted by the country in recent years, including botched tax reforms and horrendous experimentation with 'cashless society' ideas. 

Overall, BRIC Manufacturing Index (computed using my methodology on the basis of Markit data) has risen to 51.0 in 3Q 2017 on foot of improved performance in Russia and China, up from 50.6 in 2Q 2017 and virtually matching 51.1 reading in 1Q 2017. At 51.0, the index barely exceed statistical significance bound of 50.9. This runs against the Global Manufacturing PMI of 52.9 in 3Q 2017, 52.6 in 2Q 2017 and 52.9 in 1Q 2017. In simple terms, the last quarter was yet another (18th consecutive) of BRIC Manufacturing PMI falling below Global Manufacturing PMI, highlighting a simple fact that world's largest emerging and middle-income economies are no longer serving as an engine for global growth.

Stay tuned for Services PMIs analysis.

9/4/17: BRIC Manufacturing PMIs 1Q 2017: Stalling Momentum

1Q 2017 PMIs for Manufacturing are painting a mixed picture for the world's largest emerging economies, the BRIC group.

Brazil's Manufacturing PMIs averaged 46.8 in 1Q 2017, compared to 45.9 in 4Q 2016 and 46.0 in 1Q 2016. All in, 1Q 2017 marked 12th consecutive quarter of Manufacturing PMIs signalling contraction in activity. Although 1Q 2017 reading was the highest since 1Q 2015, current indicator simply implies that the rate of Brazilian manufacturing sector contraction has abated somewhat, even though the downward momentum remains in place. This means that Brazil remains the worst performing BRIC Manufacturing sector for the eighth consecutive quarter. One relatively brighter spot is that March Manufacturing PMI for Brazil came in at 49.6 - the highest monthly reading since February 2015 and relatively close to zero growth line of 50.0. It is worth watching in months to come if there is a sustained momentum in Manufacturing activity up, and if Brazil finally starts showing signs of an economic recovery from what has proven to be a horrific recession so far.

Russian Manufacturing PMIs averaged 53.2 in 1Q 2017, unchanged in 4Q 2016 and up on 49.1 average for 1Q 2016. This marks the third consecutive quarterly PMI reading for Manufacturing that sits above 50.0 marker. As Russian economy gained significant recovery momentum in 4Q 2016 and into 1Q 2017, Russia now leads BRIC Manufacturing PMIs for the second consecutive quarter, providing solid upward support for global manufacturing growth. Still, despite robust numbers and despite three consecutive quarters of growth, Russian manufacturing sector and the economy at larger remain relatively exposed to the downside risks, including risks relating to energy and commodities prices, as well as to the lack of structural reforms within Russia. We have been awaiting for some time now for the long promised Government plans for achieving sustainable growth in the economy into the early 2020s, and the plan is still lacking.

Indian Manufacturing PMIs averaged 51.2 in 1Q 2017, down from 52.1 in 4Q 2016 and worse than 51.5 reading for 1Q 2016. 1Q 2017 was the weakest of three consecutive quarters, suggesting that the economy is having difficulty recovering from the botched de-monetization experiment by the Indian Government. Few outside India are willing to call the experiment botched, primarily because it involved advice and partial funding from the U.S. agencies, but the process was a disaster for the Indian economy.

Chinese Manufacturing PMIs also came with a disappointing whimper. PMIs averaged 51.3 in 1Q 2017 on par with 4Q 2016, quashing the hopes that the credit stimulus of the 2H 2016 will translate into domestic demand uplift. Current index reading for China is not statistically significantly different from 50.0, implying a general lack of growth momentum in the Chinese manufacturing. So far, Manufacturing PMIs managed to stay above 50.0 marker (nominally, not statistically) for three consecutive quarters, but the total average for these quarters is coming in at only 51.0.

Table and charts below summarise BRIC Manufacturing PMIs dynamics through 1Q 2017:

Overall, BRIC Manufacturing PMI Average (a metric computed by me using Markit data) came in at 51.1 in 1Q 2017, down marginally on 51.2 in 4Q 2016, although up on 49.2 reading for 1Q 2016. As the chart above clearly shows, of all BRIC economies, only Russia is posting Q1 2017 Manufacturing activity in line with Global Manufacturing growth and dynamically, BRIC as a group is exerting downward pressure on global manufacturing sector.

The news, therefore, are not great for the global manufacturing economy (stalled growth momentum in 1Q 2017), and for the BRIC economies.

Stay tuned for analysis of Services and Composite figures.

3/3/17: BRIC Manufacturing PMI: Weaker Support for Global Growth in 1Q

The latest BRIC Manufacturing sector PMIs for February are continuing to signal support for global growth albeit at weaker rates than in 4Q 2016.

Brazil Manufacturing PMI for February came in at 46.9, slightly less sharp of a rate of contraction than 44.0 in January 2017. This marks 25th consecutive month of Brazil’s Manufacturing PMIs at below 50.0 - the point of zero growth. The rate of decline in Brazil’s case is shallowest since January 2016, but the series are quite volatile and at 46.9, the index is statistically significantly below 50.

Russian Manufacturing PMI moderated from 54.7 in January to 52.5 in February, but the index remained statistically above 50.0, signalling robust growth. This marks 7th consecutive month above with PMI above 50 and the 5th consecutive month that Manufacturing PMI exceeded 50.0 by a statistically significant margin, as the Russian economy continued on its expansion trend.

Chinese Manufacturing PMI cam in at 51.7, still below statistically significant growth line, but above 50.0 nominally, marking 8th consecutive month of above 50 readings (none of these readings were statistically significant, however). 51.7 marks a slight improvement on January’s 51.0.

India’s Manufacturing PMI rose to 50.7 in February from 50.4 in January. This marks the second consecutive month with above 50.0 nominal readings, but the index remains statistically indistinguishable from 50.0 zero growth mark.

Table below uses January-February average PMI for 1Q 2017 reading and compares it against full quarter averages for Manufacturing PMIs for previous quarters.

Chart below illustrates quarterly averages trends:

As shown in the chart above, 1Q 2017 results to-date indicate slightly weaker growth support from the BRIC economies overall, based on Manufacturing sector activity alone. Global growth in manufacturing continued to accelerate in the first two months of 2017, while BRIC Manufacturing posted slightly weaker growth in 1Q so far. The downward momentum in BRIC Manufacturing growth was driven by 

• Brazil (experiencing accelerated contraction in 1Q to-date compared to 4Q 2016)
• India (experiencing sharply slower growth in 1Q 2017 to-date compared to 4Q 2016)

Offsetting these trends,

• Russian growth in manufacturing sector accelerated in the first two months of 2017 compared to 4Q 2016; and
• Chinese growth in the sector remained roughly unchanged in January-February 2017 compared to 4Q 2016.

I will be posting on Services sector PMIs and Composite PMIs once we have data for Brazil.

2/2/17: BRIC Manufacturing PMIs: Russia Leads, Brazil Drags

Quick run through the Manufacturing PMIs for January for BRIC economies:

Brazil's Manufacturing PMI slumped to 44.0 in January 2017, down from 45.2 in December, marking 24th consecutive month of sub-50 readings. Worse, rate of contraction in the sector fell to 46.3 in October 2016, prompting some analysts to declare a possible turnaround in Latin America's largest economy. This has now been fully erased, with month-after-month drops through January. January reading is so dire, it marks the lowest reading in seven months and the fourth lowest reading since April 2009 and ninth lowest on record. Three-month average through January sits at 45.1, which is worse than 46.0 3mo average previously and 45.6 3mo average reading through January 2016. In simple terms, economic contraction is accelerating in the case of Brazil, despite the fact that the country has been in a crisis since mid-2013.

Russian Manufacturing PMI continued to surge in January, rising from 53.7 in December 2016 to 54.7. This marks 6th consecutive above-50 reading and, more importantly, marks the highest rate of growth in 70 months (since March 2011). Another important marker, the index has posted increasing rates of growth every month since July 2016, and has now broke away from the resistance at 53.6-53.7. Index's 3mo average though January 2017 is at 54.0, marking a huge reversal of fortunes compared to 3mo average through January 2016 (49.5). All of this is consistent with rapid recovery from the 2014-2016 crisis and we can date the start of this recovery back to May-June 2016, based on Manufacturing data.

India's Manufacturing PMI regained 50.0 territory rising to statistically insignificant 50.4 in January 2017 from 49.6 in December 2016. 3mo average through January 2071 is at 50.8, which is slightly better than 50.2 3mo average a year ago. The rate of Manufacturing expansion is the second slowest in 13 months, implying that the recovery in the Indian economy is still very fragile. As I noted in 4Q analysis of BRIC PMIs last month, India is suffering from the economic crisis brought about by botched de-monetisation of its economy. This crisis appears to be easing, but is not over, yet.

China's Manufacturing PMI failed to gain faster momentum compared to December 2016 (51.9), falling back to 51.0 in January 2017. 51.0 is not a statistically significant reading for growth in China's case, although the index reading in January was still third highest since August 2014. Chinese Manufacturing PMIs have now been notionally (but not statistically) above 50.0 in five consecutive months. Current 3mo average is at 51.3, which is a sizeable improvement on 3mo average through January 2016 (49.5). Still, current PMI reading continues to signal substantial weakness in Chinese Manufacturing and is a reason to worry.

Charts below plot the trends in Manufacturing PMIs and tabulate more recent changes:

Chart below contextualises January PMI readings into quarterly data set and includes comparative for the Global Manufacturing PMI:

Overall, Russia continues to lead BRIC economies in Manufacturing PMI readings for the third month in a row. China comes in second after Russia for the second month in a row. India is effectively posting stagnant economic performance, while Brazil is showing accelerated rate of contraction.

4/1/17: BRIC Manufacturing PMI: 4Q 2016 and FY 2016

Manufacturing PMIs for BRIC economies are out for December, so let’s update my quarterly series. As readers of this blog know, I primarily switched away from covering monthly PMIs because there is little one can add to the Markit own analysis. Instead, I have been focusing on covering quarterly results.

Table below summarises key levels of average quarterly PMIs for Manufacturing:

Brazil’s continued recession, over the course of 2016 remained deeper, judging by Manufacturing PMIs than both 2014 and 2015. 4Q 2016 Manufacturing PMI reading came in at 45.9, which signals no change in the rate of contraction on 3Q 2016 (45.9) and a slight improvement on 4Q 2015 (44.5). All in, Brazil’s Manufacturing remained at below 50.0 reading for 11th quarter in a row, and controlling for statistical significance, the country Manufacturing sector have not seen any expansion since 1Q 2013. In these terms, the country is in a far worse shape than any other BRIC economy. FY 2016 PMI average for Brazil’s Manufacturing is at 45.1, which is worse than 2015 average (46.5) and 2014 average (49.6). Even in the dire days of 2009, Brazil’s Manufacturing PMI managed to average 48.2. In other words, Brazil’s state of Manufacturing currently is worse than at any time on record.

Russian Manufacturing PMI for 4Q 2016 came in at 53.2, marking second consecutive quarter of above 50 readings, and the first quarter of statistically significant expansion. This is a welcome sign, confirming economic recovery, albeit still fragile one. To call a full recovery we need to see at least one-two more quarters of above 52.0 readings. Nonetheless, 2016 FY average is at 50.6, which is way better than 2015 FY average (48.7) and 2014 average (49.6). In fact, 4Q 2016 reading is the highest in 23 quarters (we have to go back to 1Q 2011 to get a higher level) and the seventh highest since 1Q 2006.

Chinese Manufacturing PMI averaged 51.3 over 4Q 2016, up on 50.2 average in 3Q 2016. As in the case of the Russian Manufacturing, Chinese PMIs posted second consecutive quarter of expansionary readings (adjusting for statistical significance both 3Q and 4Q were not significantly above 50 line). However, unlike Russian Manufacturing PMI, Chinese Manufacturing PMI remained below 50.0 mark for FY 2016 (at 49.8) and this marked the third year in a row that the average FY PMI was below expansion line (2015 FY average was 48.7 and 2014 FY average was 49.7).

Not to forget about India: Indian Manufacturing PMI averaged 52.1 in 4Q 2016, down slightly on 52.2 average through Q3 2016, but up on 50.0 reading in 4Q 2015. FY 2016 average reading is 51.7, which is marginally better than 51.5 average for FY 2015, but worse than 52.1 average for the FY 2014. India now had 13 consecutive quarters of above 50 readings for Manufacturing PMI (controlling for statistical significance, just two consecutive quarters).

Key takeaways:

1) As the chart below clearly shows, Chinese Manufacturing PMIs have been bouncing within statistical zero growth range since the start of H2 2011. Russian Manufacturing PMIs exhibited broadly the same dynamics since the start of 2Q 2013. Brazil’s PMIs have been in a disaster zone from around the same time as Russia’s started signalling stagnation. In fact, with exception of 4Q 2012 and 1Q 2013, BRIC Manufacturing PMIs were in the doldrums since 3Q 2011 on. Which, sort of, exposes the lie of the Russian recession being caused by geopolitical risks and sanctions. It was not. The recession was long coming and its causes are coincident across China, Brazil and Russia, with India being an exception to the BRIC grouping throughout the entire period covered by data.

2) Also per chart above, BRIC Manufacturing is now on a recovery trend that is still requiring confirmation over the next 2 quarters. This trend is in line with Global PMI index trend for the sector.

3) Russia is now the strongest performing BRIC economy in Manufacturing terms, followed by India, and with a significant gap - China. Brazil, meanwhile, continuing to act as a drag on both BRIC and global Manufacturing growth.


As an aside: I am glad that my 3Q 2016 analysis for @businessinsider @AkinOyedele Most Important Charts feature is being confirmed by 4Q data as well.

11/10/16: BRIC Manufacturing PMI: 3Q 2016

With all PMI data in (China Services data delay was a strange aberration this month), we can tally up 3Q 2016 PMI results. Based on 3mo averages, here is the summary for Manufacturing sector:

Brazil: Over 3Q 2016, Brazil’s Manufacturing sector continued to post sub-50 readings, indicating a strong pace in economic contraction. Overall, 3Q 2016 average Manufacturing PMI came in at 45.9, which is a single of slower economic contraction compared to 2Q 2016 (42.5), but basically the same rate of decline as in 1Q 2016 (46.0). 3Q 2016 was 10th consecutive quarter of sector contraction in Brazil. Worse, PMI for Brazil’s manufacturing has now averaged 49.9 over the period from 1Q 2007 through 3Q 2016. In other words, average quarterly PMI has been consistent with zero growth for 10 and a half years now.

Russia: In contrast to Brazil’s misfortunes, Russian manufacturing PMI strengthened from 49.7 in 2Q 2016 to 50.5 in 3Q 2016, reaching above 50.0 level for the first time since 4Q 2014. Still, at 50.5, the reading is not statistically different from 50.0 and signals weak turnaround in the sector. 3Q 2016 level of PMI breaks a string of 6 consecutive quarters of sub-50 readings. The depth of Russian downturn is self-evident: the last time Russian Manufacturing PMI reached above 50.0 on a statistically significant basis was in 1Q 2013. However, for all the troubles with the economy, Russian performance is significantly stronger than that of Brazil across recent years. In addition, 3Q 2016 reading for Russia is the second strongest in BRIC group, after that of India. To keep things in longer term perspective, however, Russian Manufacturing quarterly PMI averaged just 50.2 since 1Q 2007, hardly a sign of any serious growth over the last 10 and a half years.

China: Chinese Manufacturing PMI averaged 50.2 in 3Q 2016, up on 49.1 in 2Q 2016 and the strongest reading in 8 quarters. As with Russian Manufacturing PMI, Chinese reading for 3Q 2016 is not statistically different from 50.0, and once adjusted for the strong positive skew in the historical data probably underlies continued major slowdown trend in the economy. Again, for comparative purposes, since 1Q 2007, Chinese Manufacturing quarterly PMI averaged just 50.7 - a figure ahead of both Brazil’s and Russia’s, but still a reading that is too weak for the rapidly growing economy dependent on Manufacturing. 

India: India’s Manufacturing PMI averaged 52.2 in 3Q 2016, which represents a substantial rise on 51.0 average in 2Q 2016 and marks the fastest pace of sector growth in the country since 4Q 2014. 3Q 2016 also marked 12 consecutive quarter of above 50 readings for Manufacturing PMI. In contrast to all other BRIC economies, India’s Manufacturing PMI averaged 51.7 reading consistent with growth for the period between 1Q 2007 through 3Q 2016.

Overall, BRIC Manufacturing PMI did firm up in 3Q 2016, with three out of four BRIC economies reporting nominal above-50 readings for the index for the first time since 1Q 2014. As the result of improving conditions across all BRIC economies, BRIC Manufacturing PMI reached 50.4 in 3Q 2016, up on 49.0 in 2Q 2016. The rise is broadly in line with Global Manufacturing PMI improvement from 50.4 in 2Q 2016 to 51.0 in 3Q 2016.

Table below summarises recent changes:

Chart below highlights key dynamics in Manufacturing PMIs:

11/9/16: BRIC PMIs: Services & Manufacturing - August

With full 3Q 2016 update on PMIs coming up relatively soon, and having not done monthly updates on the time series for some time now, here is a quick summary of BRIC Manufacturing and Services PMIs through August 2016:

On Manufacturing side:

• Brazil remains firmly stuck under 50.0 and the talk about improvements in the economy is highly premature. The rate of contraction did slow down a bit in recent months, but getting worse more slowly is not equivalent to getting better. With 19 consecutive months of sub-50 readings, the manufacturing side of Brazil's economy remains deeply sick. Last time Brazil's manufacturing posted statistically significant growth was in March 2013. Ouch!
• Russia has been posting volatile manufacturing PMIs headlines for some time now. August reversion of PMI to 50.8 - statistically indistinguishable from 50.0 - offers no change to this pattern. That said, Russian Manufacturing appears to be stable, as opposed to contracting. Last 3mo average is at 50.6 - which, statistically, signals zero growth. This compares somewhat positively against 48.6 3mo average through May 2016. Overall, Russian manufacturing has not posted statistically significant growth reading - based on PMIs - since December 2014, with exception of one month (June 2016).
• China's Manufacturing PMI posted a non-contractionary reading of 50.0 (zero growth) in August, down from 50.6 in July. In statistical terms, Chines manufacturing posted contraction or zero growth readings for 25 consecutive months now.
• India continued to post significantly positive growth in manufacturing, based on PMIs. Over the last 8 months index reading stayed above 50.0 (statistically above 50.0 in 4 months out of 8). Current expansionary period in Indian manufacturing is now 8 months long and strengthening.

Chart below summarises trends in Manufacturing PMIs

The above shows that Manufacturing sectors are converging toward growth recovery in Russia and China, while India remains well-ahead of the rest of BRIC economies in terms of positive growth momentum. Brazil is on a clear downward trend and has decoupled from the other BRICs.

Services sectors:

As the above illustrates:

• Brazil services sectors posted yet another month of declining growth, with rate of decline accelerating in August compared to July. This marks 18th consecutive month of negative growth in the services sector in the country. As with manufacturing, country services have been performing extremely poorly since March 2013, when structural (long-term trend) slowdown in growth kicked in.
• Russia services sectors posted 7th consecutive month of above 50.0 readings, signalling relatively strong (albeit slower than in July) recovery. Over the last 6 months, Russia posted statistically significant growth in 5 months, which is rather solid sector recovery compared to the same period of 2015.
• Chinese services sectors never posted a reading below 50.0 in the entire history of the time series. However, in August, the series reading of 52.1 was stronger the July reading and marked the third time the series were statistically above 50.0 over the last 6 months. This suggests some firming up in the services sector growth in China - a welcome relief to the rather pessimistic outlook projected by the PMIs in previous months.
• India services PMI rose strongly to statistically significant reading of 54.7 in August, marking 14th straight month of above 50.0 readings (in level terms). August was the third month out of the last 6 months with statistically significant growth reading.

Just as with manufacturing, BRIC services sectors posted continuous improvements in trading conditions in India, China and Russia over the recent months. Brazil, however, remains significant drag on BRIC growth with no signs of convergence to the rest of the BRIC economies in sight.

Overall: both Manufacturing and Services PMIs suggest that BRIC economies as a group continue to act as a moderating factor on global growth trends. Although no longer dragging the global economy into growth recession, the block of largest emerging markets economies is not exactly propelling world growth to higher trend levels. However, more analysis on this later, with Composite indicators.

3/9/15: BRIC Manufacturing PMIs: August

BRICs manufacturing PMIs signalled continued worsening in growth conditions in world's largest emerging markets.

• Brazil Manufacturing PMI fell to an abysmally low 45.8 in August compared to already poor 47.2 in July. This marks the fastest rate of decline in manufacturing activity in the economy since September 2011 and the 7th consecutive month of sub-50 readings in the index.
• Russia Manufacturing PMI fell to 47.9 from 48.3 in July, marking 9th consecutive month of sub-50 readings and worst performance in the sector since May 2015. August move effectively demolished previous expectations of stabilisation in Manufacturing sector in Russia. In my previous posts on the subject I have consistently noted that early signs of such stabilisation were yet to be fully confirmed and we will have to wait until we see Services PMI for Russia for more analysis.
• India Manufacturing PMI continued above-50 trend performance in August, although the index did fall to 52.3 from 52.7 in July. Statistically-speaking, 51.5 for the Indian economy is consistent with moderate growth. Overall, Indian Manufacturing PMIs have now been in continuous expansion territory over 22 consecutive months.
• China Manufacturing PMI came in at a disappointing 47.3 in August, down on already poor 47.8 in July, marking 6th consecutive month of contraction in the sector. Overall, August reading is the lowest since March 2009. The trend suggests the economy is nowhere neat the target of 7% annual growth rate targeted by the Beijing officials.

Summary view: Overall, BRIC Manufacturing PMIs signalled deepening of the ongoing economic growth slowdown in the largest emerging economies. We will need to wait for the analysis of Services and Composite PMIs to confirm this, but August has been a disappointing month for the prospects of global growth recovery.

4/8/15: BRIC Manufacturing PMIs: July 2015

Markit released Manufacturing PMIs for July for all BRIC countries, so here is the snapshot of the data:

• Brazil Manufacturing PMI rose marginally to 47.2 in July from 46.5 in June, marking 6th consecutive month of manufacturing activity in contraction (below 50.0), with five of these months PMIs statistically significantly below 50.0. 3mo average though July is now at extremely low 46.1 against 3mo average through April 2015 at 47.3 and 3mo average through July 2014 at 48.9.
• Russia Manufacturing PMI fell from 48.7 in June to 48.3 in June - details are covered separately here: http://trueeconomics.blogspot.ie/2015/08/3815-russia-manufacturing-pmi-july-2015.html
• China Manufacturing PMI fell to 47.8 in July from 49.4 in June, signalling deterioration in sector performance and marking fifth consecutive month of contraction in the sector. This is the worst reading in the index since July 2013. 3mo average through July is now at 49.2 against 49.7 3mo average through April 2015 and 50.6 3mo average though July 2014.
• India Manufacturing PMI was the only PMI for the BRIC economies that stood above 50.0 in July, rising from 51.3 in June to 52.7 in July. This marks 21st consecutive month of above 50.0 readings. 3mo average through July 2015 is now at 51.7 (barely at statistical significance line) against 3mo average through April 2014 at 51.5 and 52.0 3mo average through July 2014.
• Three out of four BRICs economies have now been in Manufacturing activity decline territory every month since March 2015. 
• Based on 3mo averages, growth in May-July 2015 is down compared to same period in 2014 in all four BRIC economies.

Summary: BRIC manufacturing remains deep under water, with three of the four economies struggling with contracting manufacturing sector activity. Which is consistent with poor global trade performance (http://trueeconomics.blogspot.ie/2015/08/2815-global-trade-welcome-to-economic.html).

7/4/15: BRIC PMIs via Markit

, it is commonly said, is the highest form of ... 

And so Markit now releases a 'summary' of BRIC PMIs... not quite in a full release, but...

Useful... and you can read more in-depth analysis of BRIC Services PMIs here: http://trueeconomics.blogspot.ie/2015/04/6415-bric-services-pmis-overall.html and on Manufacturing PMIs here: http://trueeconomics.blogspot.ie/2015/04/2415-bric-manufacturing-pmi-march-marks.html

Ah, the perils of doing analysis in the age when the big boys follow... As always, thanks to Markit for publishing at least few remaining headline numbers of PMIs.