6/10/15: BRIC Services & Composite PMI: September 2015

BRIC Services PMIs and Composite PMIs are in for September. I covered Manufacturing PMIs for BRTIC economies earlier here.

Unlike Manufacturing sector, BRIC Services sector did much better, posting overall a shallow, but positive growth.

• Russia Services PMI was covered in detail in this post. Overall, in the end Russia Services PMI reading for September ended up being tied for the highest position in the entire group alongside India’s
• India’s Service PMI came in at 51.3, down from 51.8 in August and marking third consecutive month of above 50 readings. The rate of growth singled by the Indian PMI is, however, relatively weak. 
• China Services PMI came in at 50.5, the second weakest reading for a BRIC economy and down on 51.5 in August. Statistically-speaking, just as with Russian and Indian Services indicator, Chinese Services PMI was not distinguishable from zero growth 50.0 marker. For the economy that never posted below 50 reading in its Services PMIs, however, current reading for China is probably consistent with a sector growth plummeting sharply. This is the lowest rate of activity since July 2014. September reading was also second lowest on record.
• Brazil Services PMI was the only reading below 50 in the BRIC group and at 41.7 it is a very poor reading and is below August 44.8. Brazil has now posted the weakest of Services PMIs reading for all BRIC economies every month since March 2015.

As Chart above clearly indicates, Brazil weakness is sharp and sustained over some time now. In contrast, Russia has managed some stabilisation in the Services sector with very strong upward correction starting from February 2015 low. Overall, you can also see the extremely compressed and subdued growth activity in the Sector across the BRIC economies starting with 3Q 2013 on. 

Summary table below highlights recent changes in Manufacturing and Services PMIs for the BRIC economies:

Now, let’s consider Composite PMIs.

• Again, Russia Composite PMI was covered in the separate earlier post here. In comparative terms, Russian Composite PMI was the second highest in the BRIC group after India.
• India Composite PMI came in at 51.5 in September compared to 52.6 in August, marking a deterioration in the rate of growth in the economy. 51.5 reading is border-line significant in statistical terms, suggesting possibly sharper downturn in the economic activity than simple decline of 1.1 points suggests. Still, India posted the best performing Composite PMI of all BRIC.
• China Composite PMI came in at disappointing 48.0 in September, down from an already weak 48.8 in August. Last two months readings suggest negative growth in the Chinese economy, although it is hard to call what exactly is happening in the actual economy. Nonetheless, China was a negative drag on the BRIC growth for the second month in a row.
• Brazil Composite PMI literally is tanking. It hit 42.7 reading in September, down from 44.8 in August. This marks a seventh consecutive month of composite PMI for the country signalling an outright contraction in output. 

Charts above plot BRIC Composite PMIs. Several things worth noting here are:

1. There is continued divergence in Russian PMIs (to the upside) and BRIC ex-Russia PMIs (to the downside) driven by sharp deterioration in Brazil economic environment over the last 7 months. Local peaking of BRIC ex-Russia PMIs in February 2015 is now fully exhausted and in September, BRIC ex-Russia index took a sharp nosedive. Trendiness reflect this divergence and show that it is currently well-established. In other words, although Russian economy is performing poorly, ex-Russia BRIC economies are performing even worse, even if we include into this sub-grouping a relatively well performing India.
2. Overall, BRIC Composite PMI is on a sustained downward trend since June 2014 and in July-September 2015 this downward trend accelerated sharply. BRIC Composite PMI now signals recessionary conditions across the whole group of four largest Middle-Income and Emerging Markets economies. On a longer time line, weak performance in the BRIC economies has been now a feature of the global growth environment since the end of 1Q 2013.

I will be covering quarterly PMI signals in the subsequent post, so stay tuned.

1/10/15: Russia Manufacturing PMIs: Some Easing in Contraction

Russia’s manufacturing PMI released by Markit showed slower rate of decline in the sector activity in September, rising to 49.1 from 47.9 in August. This is the highest reading in the series since February 2015, but marks 10th consecutive month of sub-50 readings.

Per Markit: both output and new orders posted “negligible growth” in September. More importantly:

• “…excess capacity remained prevalent, leading to further job cuts, while price pressures continued to intensify due to a lower value of the rouble against other major international currencies.”
• “Contributing to the rise in the PMI in September were improved trends in output and new orders, following a period of contraction. In particular, the intermediate goods sector performed well, recording rises in both output and new work. There were reports from the survey panel that domestic demand had firmed over the month and was a key support to production and order books.”
• Key driver to the upside, therefore, was imports substitution. 
• “International demand, in contrast, continued to deteriorate, as highlighted by a fall in new export orders for a twenty-fifth successive month. The rate of contraction was again solid, but nonetheless the slowest since June.”

Overall, Manufacturing PMI signal, in my view, is not yet consistent with expected stabilisation of the economy. Remember, I recently noted that previous hopes for economic recession bottoming out in 2Q 2015 have been squashed by the data, with new consensus outlook for stabilisation in 3Q. Based on the data to-date, this stabilisation did not take place. We are now looking at another quarter of below zero growth and most likely will see sub-zero GDP growth through 4Q 2015 as well.

Chart to illustrate manufacturing sector activity trends:

Note: I covered China Manufacturing, Services & Composite PMIs for September in an earlier note here http://trueeconomics.blogspot.ie/2015/10/11015-china-pmis-signalling-deeper.html. Overall, Russian Manufacturing PMI (and the exports component of the index especially) are broadly in line with Chinese data so far.

1/10/15: China PMIs: Signalling Deeper Problems Ahead

Latest Manufacturing and Services PMI data for China posted a strong signal of continued deterioration in the economy.

Manufacturing PMI came in at the lowest levels since March 2009, posting 47.2 in September, compared to 47.3 in August, and marking 7th consecutive month of sub-50 readings. Over the last 12 months, Manufacturing PMI reached above 50.0 in just two months, hit exactly 50.0 in one (marking zero growth in the sector) and was below 50 (marking contraction of activity) in the rest. Last time Manufacturing PMI was statistically above 50.0 was in July 2014 and last time it happened before then was in October-November 2013. In other words, there has not been statistically significant growth singled by Manufacturing PMIs for some two years now.

Per Markit release, things were even worse than the headline Manufacturing index suggested:

• “Total new work fell at the quickest rate in over three years, partly driven by a steeper fall in new export business. 
• “As a result, companies cut output at the sharpest rate in six-and-a-half years, while staff numbers fell at the quickest pace since the start of 2009. 
• “The health of the sector has now deteriorated in each of the past seven months. Furthermore, the latest deterioration was the most marked since March 2009.”

On Services side, Markit’s Services PMI for September came in at 50.5, the lowest reading since July 2014. Services PMI for China has never posted a sub-50 reading in the series history, so there is little we can tell about actual levels of activity in the sector based on this data. Still, 50.5 reading is so bad, it ranks as the second lowest reading in the history of the series.

Which brings us to the Composite PMI. China’s Composite PMI posted another sub-50 reading, falling from August 48.8 to September 48.0. This implies the fastest rate of contraction across the economy since January 2009.

Per Markit:

• “Employment trends continued to diverge across the manufacturing and services sectors in September. Manufacturers cut their workforce numbers at a solid pace that was similar to that seen in the prior month, while service providers continued to increase their payroll numbers. However, the rate of job creation was only slight, despite improving upon August’s fractional pace. Consequently, employment at the composite level declined for the fourth successive month.
• “Manufacturing companies signalled a further increase in outstanding workloads in September, which was often linked to reduced productive capacity. Meanwhile, softer growth in new work enabled service sector firms to work through their unfinished business in September and at the fastest rate in ten months. Overall, backlogs of work declined again at the composite level, albeit at a marginal rate.”

In simple terms, whatever growth was squeezed out of both sectors, that growth came from depleting outstanding orders, rather than signing new business.

Two charts to highlight these trends:

23/9/15: China Flash PMI for Manufacturing: September

China flash Manufacturing PMI is at 47.0 for September - lowest level since March 2009 and 7th consecutive reading below 50. Over the last 12 months, the index has been below 50 in 9 months, at 50 for one month and has not been statistically above 50 since July 2014.

Index is now on a solid downward trend since January 2010 and looks set to be the second worst performing PMI in BRIC group (after Brazil) for the third month in a row.

3/9/15: BRIC Composite PMI: August

Having covered Manufacturing (link here) and Services PMIs (link here) for BRIC countries, consider Composite PMIs next.

Note, to make series consistent with my previous indicator, I use x2 factor on composite PMI readings from Markit, going forward, so reference number here is not 50.0 but 100.0.

• Brazil Composite PMI firmed up marginally to 89.6 in August from 86.3 in July. This is the fifth highest reading in recent months, but sixth consecutive reading below 100. Per Markit: "Rising to a five-month high… the Brazil Composite Output Index pointed to a further, although weaker, decline in private sector output. Whereas manufacturing production decreased at a quicker rate, the reduction in service sector activity softened. … New business in the Brazilian service sector decreased for the sixth straight month in August. …Order book volumes at manufacturers dipped at the fastest pace in four years. Subsequently, the contraction in total private sector new work accelerated to the sharpest in three months."
• Russian Composite PMI was also soft, falling to 98.6 in August compared to 101.8 in July, returning the economy toward renewed recessionary momentum after fragile improvement in the first month of 3Q 2015. More on Russian Composite PMI here: http://trueeconomics.blogspot.ie/2015/09/3915-russian-manufacturing-services.html.
• China Composite PMI too posted sub-100 reading, falling to 97.6 in August compared to 101.6 in July. Per Markit release: "Though only modest, it was the fastest contraction of output seen since February 2009. The renewed decline in overall output was largely driven by a faster contraction of manufacturing production in August. Furthermore, the latest fall in manufacturing output was the quickest seen in 45 months. Meanwhile, slower growth in service sector business activity also weighed on the headline index. Consequently, total new business at the composite level fell for the first time since April 2014, albeit marginally. ...the latest expansion in service providers’ staff numbers was the weakest seen in the current two-year sequence of job creation and fractional. Job shedding persisted at manufacturing companies, with the pace of reduction quickening slightly since July. Overall, composite employment fell for the third month in a row and at a modest pace."
• India Composite PMI firmed up to 105.2 from 104.0 in July, marking improved growth outlook for the economy and breaking, once again, trend with the rest of the BRICs. Per Markit: "India’s private sector economy improved further in August. The seasonally adjusted Nikkei India Composite PMI Output Index rose to a five-month high… The uptick in growth was boosted by a quicker expansion of services activity, as the increase in manufacturing production softened in August. …New business across the private sector as a whole expanded at a moderate pace that was the quickest since March."

SUMMARY: As charts above show, BRICs as a block are now exerting negative drag on the global economy. This is extremely worrying especially as the core drivers for this weakness are now China and Brazil, opposed to Russia. While Russian economy remains in a recession, overall, it is responsible for lesser share of negative momentum in the BRICs index than the other two troubled economies since around the start of 2Q 2015.

3/9/15: BRIC Servies PMI: August

BRIC Services PMIs are out, so here is the summary of latest changes:

• Brazil Services PMI rose to 44.8 in August from July's 39.1. This marks seventh consecutive month of Services reading below 50.0. July fire was horrific and cam on top of abysmal 39.9 reading in June. August reading is still below 50, but is now the second highest in 7 months. In 12 months from August 2014, the index posted above 50 reading in only two months. This confirms deep-running recessionary dynamic in Brazil's economy.
• Russia Services PMI came in at 49.1, below 50.0 and down on 51.6 in July. Details covered here. As noted, this is a disappointing reading signalling weak contraction in the Services side of the Russian economy, compounding sharper contraction in Manufacturing.
• China Services PMI posted 51.5 in August, down from 53.8 in July. This index has never reached below 50.0 in its history, so 51.5 is a weak reading overall. In fact, this is the slowest pace of expansion signalled by the Services sector since July 2014. Taken together with rather sharp ongoing contraction in Manufacturing, the Services PMI for China suggests that current rate of economic growth in the country is well below the target of 7% annual rate of growth targeted by the Chinese Government. Most likely, stripping out financials (supported by the Government aggressive intervention in the stock markets in recent months), China's Services PMI would be in much worse shape.
• India Services PMI came in at 51.8 - signalling acceleration in growth from 50.8 in July. This marks second consecutive month of above 50.0 readings for this index. 

Some Markit comments on the above:

For China: "The Caixin China General Services Business Activity Index …signalled the slowest increase in activity in the current 13-month sequence of expansion. Total new order growth at service sector companies also weakened in August, with the latest increase in new business the slowest seen in just over a year. According to anecdotal evidence, relatively subdued market conditions had dampened client demand in the latest survey period."

For India: "The seasonally adjusted Nikkei Services Business Activity Index [pointed] to a faster, although modest, expansion in output. Activity growth was recorded in three of the six monitored categories, namely, Hotels & Restaurants, Post & Telecommunication and ‘Other Services’. Leading services activity to increase was a further rise in incoming new work. According to panellists, higher demand coupled with capacity improvements and increased marketing all had contributed to the latest expansion in new business. Despite quickening since July, the rate of growth was moderate. While manufacturing new work rose at a weaker pace than in July, growth nevertheless outpaced that seen at their services counterparts."

CONCLUSION: BRIC economies are suffering from the twin effects on internal structural weaknesses (domestic markets and policies) and from lack of external demand growth. These leading emerging market economies are now solidly in a recessionary dynamic (Brazil and Russia), and near hard landing territory (China). India continues to break trend with the rest of BRICs, although this remains to be seen how long its economy can sustain this decoupling. 

5/8/15: BRIC Composite PMIs: July 2015

I covered BRIC economies' Manufacturing PMIs for July here: http://trueeconomics.blogspot.ie/2015/08/4815-bric-manufacturing-pmis-july-2015.html.

Now, let's take a look at Services PMIs and Composite.

• Brazil Services PMI fell from an extremely poor 39.9 in June 2015 to an abysmal 39.1 in July, reaching a joint historical low (total history for the series spans 101 months). July reading was so poor, 3mo average through last month fell to 40.5 against 3mo average through April 2015 at 48.3 and 3mo average through July 2014 at 50.7.
• Per Markit: "The downturn remained widespread across the services categories covered by the survey, with all of the sub-sectors registering substantial falls in business activity. The steepest contraction was at Hotels & Restaurants, followed by Transport & Storage. The level of new business in the service economy decreased for the fifth straight month in July. The pace of reduction was slightly faster than in the prior month, but nonetheless still less severe than in May (when new business fell at the quickest pace since April 2009). 
• Brazil's woeful Services PMI was compounded by a drop in Manufacturing (see summary of both below), driving official Brazil Composite PMI deep into contraction territory at 40.8 against already extremely low 41.0 in June. Overall, Composite index has hit the lowest point since March 2009.
• Overall: there is absolutely no doubt that both Services and Manufacturing are currently in a recession, with below 50 readings in both sectors present since March 2015

• Russia Services PMI strengthened from 49.5 in June to 51/6 in July marking the return to growth in the sector. On a 3mo average basis, July 2015 reading was at 51.3, well ahead of 3mo average through April 2015 (46) and 3mo average reading through July 2014 (48.5). 
• However, Russian Manufacturing PMI (see separate coverage here: http://trueeconomics.blogspot.ie/2015/08/3815-russia-manufacturing-pmi-july-2015.html).
• The respective Russian Composite Output Index improved to 50.9 in July, up from 49.5 in the preceding month. Per Markit: "Supporting the rise in overall activity for the service sector was a fourth consecutive month of increasing volumes of incoming new business. Moreover, the rate of growth accelerated to the highest recorded for twenty months amid reports that a more positive economic climate was driving demand for services upwards."
• More details on both Russia Composite PMI and Services PMI here: http://trueeconomics.blogspot.ie/2015/08/5815-russian-services-composite-pmis.html.
• Overall: these are some tentative early-stage signs of economic stabilisation and possibly recovery. Too early to call a new trend, however, and any talk of real recovery will require sustained rise in Manufacturing PMI above 51-51.5 mark.

• China Services PMI posted yet another above 50 reading (the Index never once dipped below 50.0 mark) rising strongly from 51.8 in June to 53.8 in July. This is the strongest reading in the Index since August 2014 and brings 3mo average through July 2015 to 53.0, up on 52.4 3mo average through April 2014 and on 51.3 3mo average through July 2014.
• Sub-50 reading in Manufacturing PMI reflective of further worsening in manufacturing downturn in the economy (ongoing since November 2014 with a brief interruption in February 2015) meant that China Composite PMI posted "only fractionally above the neutral 50.0 mark at 50.2, down from 50.6 in June, and pointed to the weakest rate of expansion in 14 months."
• Overall: China remains on slower growth path with Manufacturing under significant pressure. This trend is linked to the fortunes of global trade flows (more so than Services) and to weakening investment outlook for Chinese firms.

• India Services PMI rose to 50.8 in July, marking a very shallow recovery in the sector and breaking two months streak of sub-50 readings. July reading was up on 47.7 in June and on a 3mo average basis, figures through July 2015 are at 49.4 - signalling weak contraction against 3mo average through April 2015 at 53.1 and 3mo average through July 2014 at 52.3.
• Strong Manufacturing performance in PMI terms and weak, but above 50 reading in Services provided upside support for the Composite PMI. Per Markit: "After having fallen in the previous month, output across the combined manufacturing and service sectors in India rose during July. The seasonally adjusted Nikkei India Composite PMI Output Index climbed to 52.0 from 49.2 in June to signal a modest increase in activity. Growth has now been recorded in 14 of the past 15 months. The return to expansion was helped by a first rise in services activity in three months and an acceleration in the rate of manufacturing production growth."
• Overall: India regained its strong performance dynamic in July across both sectors, with relatively weaker performance in Services. Indian economy currently leads the BRIC group in terms of growth momentum as signalled by PMIs.

Summary of changes across both Manufacturing and Services PMIs is provided below:

And chart for Services PMIs illustrates: 

Overall, BRIC activity as contributor to global growth has improved, remains weak. In June, the BRIC group of economies was contracting and exerting downward pressure on global growth. However, in July, they made a positive contribution, albeit extremely shallow.

In recent months, it has become customary for BRIC economies analysts to suggest that Russia is the weakest component to BRIC activity. However, while this assertion was true through 1Q 2015, it is no longer holding since then:

This, however, is of little consolation to an economy in a recession.

4/8/15: Global Manufacturing PMI Signals Faltering Growth in July

Global Manufacturing PMI was unchanged in July compared to June at 51.0, signalling weak growth and stalled growth momentum. Overall, activity is now at "its joint-weakest reading during the past two years".

Per Markit: "Underpinning the increase in output was further growth in new order inflows. However, the pace of improvement in new business slowed as new export orders declined for the second time in the past three months. New export business decreased in China, Germany, France, the UK, Taiwan, South Korea, Greece, Turkey, Indonesia, Vietnam, Russia and Brazil, and was little-changed in the US and Malaysia."

You can read more on this in my coverage of BRIC Manufacturing PMIs here: http://trueeconomics.blogspot.ie/2015/08/4815-bric-manufacturing-pmis-july-2015.html

9/7/15: BRIC Composite PMIs: June 2015 & 2Q 2015

In the previous post covering Manufacturing & Services PMIs for BRIC economies, I promised to provide a separate summary of composite PMI-signalled activity.

Here is the summary of both Services and Manufacturing PMIs moves in June:

On a simple cumulative basis (unweighted by sector weights, not to be confused with Markit's Composite PMI):

• Brazil composite activity stood at 86.4 in June, down from 88.4 in May. 2Q 2015 average was 88.5 against 98.4 for 1Q 2015 and down from 99.7 for 2Q 2014. In short - we have ongoing and worsening slowdown in activity across both sectors combined, with the fourth consecutive month of the combined reading below expansion line (100).
• Russia composite activity stood at 98.2 in June, down from 100.4 in May. 2Q 2015 average was 99.4 - an improvement on 92.2 for 1Q 2015 and better than 96.4 recorded for 2Q 2014. The ongoing slowdown is moderating, with activity across both sectors combined showing slower rates of contraction in 2Q 2015. That said, combined activity has been posting contractionary signals in 8 out the last 9 months.
• India composite activity fell to 99.0 in June, posting the first month of sub-100 reading since April 2014, down from 102.2 in May. 2Q 2015 average was 101.6 against 105.4 for 1Q 2015 and down from 102.4 for 2Q 2014. This implies that Indian economic activity growth was posting a significant slowdown q/q and y/y in 2Q 2015.
• China composite activity stood at 101.2 in June, down from 102.7 in May. 2Q 2015 average was 101.9 virtually unchanged against 102.0 for 1Q 2015 and up slightly on 101.1 for 2Q 2014.  China's economy was the only economy in the BRIC group that remained above the 100 line in June.

Charts below illustrate the latest trends:

In summary, things are getting worse, progressively across the BRIC economies, with Russia, surprisingly, presenting an upside momentum to the overall group growth dynamics. That said, the trends are yet to be fully established for Russia. Overall, BRICs have now running along the negative growth trend for some time and BRIC combined (weighted by each economy share of total group GDP) momentum is at 99.0 in June, marking the first sub-100 reading since May 2014. 3mo average through 2Q 2015 is at 100.3, down on 1Q 2015 average of 101.4 and down on 2Q 2014 average of 100.8.

9/7/15: BRIC Manufacturing & Services PMIs: June 2015 & 2Q 2015

With BRICS summit on its way, an updated post on BRIC PMIs (data from Markit):

Brazil:

Manufacturing PMI stood at 46.5 in June, singling sharp rate of contraction that was somewhat slower than the decline in May (45.9). Per Markit, "new orders and output both drop at sharp rates; inflationary pressures ease." June PMI was the highest in four months and marks the fifth consecutive month of sub-50 readings. 3mo average is now at 46.1 against 3mo average through March at 48.8 and 3mo average through June 2014 at 48.9.

Services PMI also came in at disappointing levels, falling to an abysmally low 39.9 in June from already low 42.5 in May. This marks the lowest reading in Services PMI since March 2009 and the second lowest reading in Services PMI in history.

As noted by Markit, "Private sector jobs cut at quickest pace for over six years; Steep, but slower, contraction in new orders received by private sector firms."

With 4th consecutive month of sub-50 readings, services PMI averaged 42.3 in 3mo period through June 2015, compared to 49.5 average for the 3mo period through March 2015 and 50.8 for the 3mo average through June 2014.

Overall, "Brazil’s private sector economy registered its sharpest retreat since March 2009. Down from 42.9 in May to 41.0 in June, the Composite Output Index was indicative of a steep drop in activity, with sharp falls seen at both service providers and manufacturers."

Russia:

Russian PMIs are covered in detail here: http://trueeconomics.blogspot.com/2015/07/4715-russia-services-and-manufacturing.html?spref=tw and summarised below in the table.

India:

India's Manufacturing PMI came in at 51.3, signalling weak-to-moderate expansion of manufacturing output and down from 53.5 in May. On a 3mo average basis, June 2015 PMI was at 51.7 - marginally slower than 3mo average of 52.1 for the period January-March 2015 and slightly ahead of 51.4 3mo average registered through June 2014. Markit noted that June figures presented the "slowest rise in new work since September 2014; Negligible increases in input costs and output charges."

On Services PMI side, June reading of 47.7 marks second consecutive month of sub-50 readings and a sharpening in the downturn from 49.6 in May 2015. 3mo average through June 2015 is now at 49.9 against 3mo average through March 2015 of 53.1 and 3mo average through June 2014 at 51.0. Services PMI is now sitting at the lowest level since March 2014.

Per Markit: "Falling to 49.2, from 51.2 In May, the seasonally adjusted Nikkei India Composite PMI Output Index recorded below the crucial 50.0 threshold for the first time since April 2014. Reductions in activity were centred at service providers, as manufacturing production rose during the month."

China:

HSBC Purchasing Managers’ Index for manufacturing posted at 49.4 in June. This was the fourth successive, marginally up on 49.2 in May. This marks 4th consecutive month of Chinese manufacturing PMI readings below 50. Per Markit release, "Output contracts at slower pace as new orders show signs of revival" but "Staff numbers are cut at sharpest rate since February 2009." 3mo average through June 2015 was 49.2 down from 3mo average for 1Q 2015 AT 50.0 and lower than 49.4 3mo average through 2Q 2014.

On services side, PMI posted a significant "moderation in the rate of service sector activity growth. Moreover, it was the slowest expansion in services business activity since January, as signalled by the HSBC China Services Business Activity Index posting 51.8, down from May’s eight-month high of 53.5." However, 3mo average for services was at 52.7 in June 2015, compared to 52.0 in 3mo period through March 2015 and 51.7 for the 3mo average through June 2014.

"HSBC China Composite PMI™ data (which covers both manufacturing and services) pointed to a further rise in total business activity in China during June. However, the rate of expansion eased to a marginal pace that was the slowest recorded since May 2014. This was signalled by the HSBC Composite Index posting only slightly above the neutral 50.0 mark at 50.6 in June, down from 51.2 in May."

CHARTS

As shown in the charts above, growth conditions remain negative in 3 out of 4 BRIC economies in Manufacturing and Services. No single BRIC economy is posting broad cross-sectoral growth in June and on quarterly averages basis, 

• Brazil is running negative growth signals in both Services and Manufacturing;
• Russia and China are running negative growth in both Manufacturing;
• India is running negative growth in Services.

This contrasts with 1Q 2015 when Brazil and Russia were posting negative growth across both Services and Manufacturing, while India and China were posting positive growth across both sectors.

Things are getting tougher in the BRICs...

Stay tuned for composite analysis and summary next.

3/6/15: BRIC Services & Composite PMIs: May 2015

Time to tally up BRICs PMIs for May.

Manufacturing numbers were covered here: http://trueeconomics.blogspot.ie/2015/06/2615-bric-manufacturing-pmi-continued.html

On services side:

• Brazil Services PMI tanked spectacularly, falling from already strongly contractionary 44.6 in April to a 74-months low of 42.5 in May. 3mo average through May is now at an abysmal 45.0 against 3mo average through February at 49.9 and 3mo average through May 2014 of 50.7. All in, this is the third consecutive month of sub-50 readings and adjusting for statistical significance, Services PMI index rose above 50.0 only three times over the last 16 months. 
• Russia Services PMI, meanwhile, surprised to the upside, rising from 50.7 in April (signalling weak growth) to 52.8 in May, signalling pretty robust recovery. 3mo average through May, however, is poor at 49.9, albeit an improvement against 3mo average through February at 43.7 and 3mo average through May 2014 of 46.9. All in, this is the second consecutive month of above-50 readings and first month of readings statically significantly above 50.0. May reading is the strongest since December 2013.
• China Services PMI continued to signal expansion in the sector at an accelerating rate, as the index increased from 52.9 in April to 53.5 in May. 3mo average through May is now at a relatively strong 52.9 against 3mo average through February at 52.4 and 3mo average through May 2014 of 51.3.
• India Services PMI tanked in May, falling from 52.4 in April to a 13-months low of 49.6 in May. 3mo average through May is now at 51.7 against 3mo average through February at 52.5 and 3mo average through May 2014 of 48.8. This development suggests substantial weakening in growth conditions in India which was the bright spot for growth within the BRICs group.

As the charts below shows, on a composite side, Russia has now reversed - for the second month running - previous trend and is now acting as a positive growth contributor to BRICs aggregates. The rest of BRICs, however, are acting as a drag on growth, especially when it comes to Brazil.

Table below summarises recent changes in the PMIs for both components across all BRICs:

7/5/15: BRIC Services & Composite PMIs: April 2015

In previous post I covered BRIC Manufacturing PMI for April (http://trueeconomics.blogspot.ie/2015/05/5515-bric-manufacturing-pmi-further.html), so now let's take a look at the Services PMIs.

• Brazil Services PMI reading for April came in at 44.6 - marking rapid contraction in the sector that is worse than 47.9 reading in March. Overall, 3mo average through April now stands at 48.3, which marks worse performance than already contractionary 48.7 for the 3 months through January 2015. 3mo average through April 2014 was 50.7. April was the second consecutive month of readings below 50 and over the last 9 months, there were only two months of the PMI reaching above 50.0.
• Russian Services PMI were covered ind entail here: http://trueeconomics.blogspot.ie/2015/05/7515-russian-services-and-composite.html. Dynamically, April reading of 50.7 came in as a surprise, breaking a 6mo-long streak of sub-50 postings. 3mo average through April is at very low 46.0 and 3mo average through January 2015 was even worse - at abysmal 44.7. A year ago, 3mo average through April 2014 stood at 48.4. Despite improved performance in April, it is hard to see Services PMI breaking the sub-50 trend in the medium term.
• Chinese Services PMI came in at a marginally stronger growth, posting a reading of 52.9 in April compared to 52.3 in March. This is the third consecutive month of rising PMI readings and 3mo average through April 2015 currently stands at 52.4, which is marginally lower than 3mo average through January 2015 (52.7), but somewhat above 3mo average through April 2014 (51.4).
• India Services PMI came in at 52.4, marginally lower than 53.0 in March 2015, marking second consecutive month of PMI declines. 3mo average through April 2015 is at 53.1 which is stronger than 52.0 for the 3mo through January 2015 and significantly above 48.3 3mo average through April 2014.

Full summary of Manufacturing and Services PMIs changes here:

As the above indicate, India remains on the upward PMI trend in Services sectors against flat, but above 50.0, trend for Manufacturing sectors. Brazil remains on downward trends in both Services and Manufacturing sectors, while China remains on a relatively weak upward trend in Services and weak downward trend in Manufacturing. Russia is too volatile to call on Services side and weak, but stabilising on Manufacturing side.

Combining the two sectors, overall activity in the BRIC economies suggests temporary (for now) convergence of Russian composite indicator to the upside, against BRIC ex-Russia indicator to the downside.

Once we take into account relive sizes of each BRIC economy in the global economy, BRIC group contribution to global growth appears to continue trending to the downside, as shown below:

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.

4/3/15: BRIC Services PMIs: Stronger Growth and Russia Divergence

I covered BRIC Manufacturing PMI earlier this week: http://trueeconomics.blogspot.ie/2015/03/2315-bric-manufacturing-pmi-february.html

Now, let's take a look at the Services sectors performance.

• Russia Services PMI are covered in detail here: http://trueeconomics.blogspot.ie/2015/03/4315-russian-services-and-composite.html
• Brazil Services PMI came in at a surprising 52.3, breaking four months streak of sub-50 readings and rising strongly up on 48.4 in January. 3mo average through February 2015 is at 49.9 against the 3mo average through November 2014 at 49.3. An improvement on 3mo basis, but down on year ago 3mo average through February 2014 (50.7).
• China Services PMI came in at 52.0, a slight improvement on relatively weak performance in January (51.8). 3mo average through February is at 52.4 against 3mo average through November 2014 at 53.4 and against 3mo average through February 2014 at 50.9. There is very little of anything spectacular in Chinese data so far.
• India Services PMI came in at 53.9 a rise on 52.4 in January 2015. On 3mo average basis, current average through February 2015 is at 52.5 against previous 3mo average through November 2014 at 51.2 and against 3mo average through February 2014 at 47.9. 

Summary: Services PMIs have deteriorated over the last five months in Russia and deteriorated very sharply, signalling massive contraction in the Services sectors in the economy, mostly concentrated on financial services. Meanwhile, Services PMIs posted strengthening is India (surprise reversal of downward momentum over October 2014 - January 2015 period). China still showing some weaknesses, but positive growth in the sector, while India is clearly on a rebound with PMIs increasing over the last 3 months and now standing at the highest level since June 2014.

As the above clearly shows, Russia is a major point of divergence for Services sectors within the BRIC economies. This is not new, but the divergence is getting sharper and sharper. We are not yet at 2009 rates and levels of decline, but we are getting there.

Composite BRICs PMIs will be covered in the next post.

8/2/2015: Composite Activity Signals Weakening of Growth in BRIC

Having covered Manufacturing PMIs and Services PMIs for BRIC economies, let's take a look at the Composite measure of PMIs.

First, combined Composite Measure for all BRIC economies. The measure is based on a sum of Services and Manufacturing PMIs for each country, weighted by the relative size of each economy (as a share of the global GDP, based on IMF data).

As the chart above shows, Composite measure of PMI-captured activity has fallen for the BRIC group from 102.3 in December 2014 to 101.1 in January 2015. 3mo average through January stood at 101.9 against 102.5 in 3mo period through October 2014 and 100.8 in 3 months through January 2014. Since July 2013, the recovery in BRIC PMIs was weak and volatile, with downward trend setting in from June 2014.

Next, consider disaggregated PMIs for Russia as opposed to BRIC-ex-Russia:

The chart above shows the divergence between Russian PMIs and those of the rest of the BRIC group. This divergence set in in October 2013, well before the start of the Ukrainian crisis in December 2013-January 2014. Nonetheless, even removing Russia out of the equation, BRIC PMIs have slipped in January 2015 compared to December 2014.

Conclusions: Overall trends in BRIC PMIs show weakening of the economic activity in January 2015 compared to December 2014. This weakening does not remove the positive trend established following April 2014 local low in the series, but it does suggest that the recovery trend in PMIs is likely to be much weaker this time around than post September 2011 local low. Meanwhile, Russia is continuing to diverge from the BRIC trend and is showing significant deterioration in activity in January, consistent with expectations of major economic growth pressures in Q1-Q2 2015.

8/2/15: BRIC Services PMIs: Poor Performance in January

BRIC PMIs for January are continuing to show divergence in growth across the four economies. I have covered manufacturing sector trends here: http://trueeconomics.blogspot.ie/2015/02/8215-bric-manufacturing-pmis-one-cold.html.

Now, let's take a look at Services PMIs:

• Brazil Services PMI fell to 48.4 in January from 49.1 in December signalling deeper contraction and marking fourth consecutive month of sub-50 readings. Current 3mo average is at 48.7 and this compares poorly to the already contractionary 49.7 3mo average through October 2014. January 2014 3mo average was 51.2. 
• Russian Services PMI dropped significantly from already poor reading of 45.8 in December to strongly contractionary 43.9 in January. 3mo average through January 2015 is at 44.7 and this compares unfavourably to 3mo average through October 2014 at 49.5. We now have 4 consecutive months of sub-50 readings in the series. 3mo average through January 2014 was 52.2. Overall, substantial decline in Services activity as signalled by the PMI reading.
• China Services PMI stayed declined from 53.4 in December 2014 to 51.8 in January 2015. This is the weakest performance since July 2014. 3mo average through January is at 52.7, virtually unchanged on 52.6 average 3 mo reading through October 2014 and an improvement on 51.4 3mo average through January 2014.
• India Services PMI improved from 51.1 in December to 52.4 in January, with 3mo average through January reading at 52.0 - ahead of 3mo average through October 2014 (51.1), and ahead of 3mo average through January 2014 (47.4).
• Overall, Russia (-1.9 points), China (-1.3 points) and Brazil (-0.7 points) posted declines in Services PMIs in January compared to December 2014, while India (+1.3 points) posted an increase. 
• Conclusion: BRIC Services sectors are still suffering from weak growth conditions, similar to those observed in December, with Russia being the weakest, followed by Brazil, and with very weak and weakening growth in China, set against improving growth in India.

Chart and summary table below:

8/2/15: BRIC Manufacturing PMIs: one cold January for growth

BRIC PMIs for January are continuing to show divergence in growth dynamics across the four economies, across the two key sectors, and a broad slowdown in growth across majority of the BRIC parameters. Here are some details:

Starting with Manufacturing PMIs:

• Brazil Manufacturing PMI improved marginally to 50.7 from 50.2 in December. Current 3mo average is at 49.9 and this compares as a weak improvement on 49.4 3mo average through October 2014. January 2014 3mo average was 50.3. Across the board - weak growth returned to Brazil's manufacturing, but both m/m and 3mo on 3mo growth improvements were poor.
• Russian Manufacturing PMI dropped significantly from already contractionary 48.9 in December to strongly contractionary 47.6 in January. 3mo average through January 2015 is at 49.4 and this compares unfavourably to 3mo average through October 2014 at 50.7. However, 3mo average through January 2014 was even worse - at 48.7. Overall, substantial decline in Manufacturing activity as signalled by the PMI reading and second consecutive month of sub-50 readings.
• China Manufacturing PMI stayed virtually flat at 49.7 in January as compared to 49.6 in December. 3mo average through January is at 49.8, down on 50.6 3mo average reading through October 2014 and on 50.3 3mo average through January 2014. Just as in the case of Russia, Chinese Manufacturing activity posted second consecutive month of sub-50 readings.
• India Manufacturing PMI slipped from 54.5 in December to 52.9 in January, with 3mo average through January still reading at 53.6 - ahead of 3mo average through October 2014 (52.0), and ahead of 3mo average through January 2014 (51.1).
• Overall, India (-1.6 points), and Russia (-1.3 points) posted declines in Manufacturing PMIs in January compared to December 2014, while Brazil (+0.5 points) and China (+0.1 points) posted increases. Declines outstripped increases by a wide margin and two economies (China and Russia) posted sub-50 readings. 
• Conclusion: BRIC manufacturing sectors are still suffering from weak growth conditions, with Russia being the weakest, followed by China, and with very anaemic growth in Brazil and slowing growth in India.

Chart and summary table below:

Services PMIs covered in the next post.

2/12/2014: BRIC Manufacturing PMIs: November 2014

BRIC Manufacturing PMIs are out for November and here are the results:

• Brazil's Manufacturing Activity posted another (3rd in a row) monthly sub-50 reading, falling to 48.7 in November from 49.1 in October. This is the weakest reading since July 2013, matching the same reading in June 2014. 3mo average through November is at 49.0 against 3mo average through August at 49.2. The rot has been long-running: 3mo average through November 2013 was 50.0.
• Russia's Manufacturing PMI rose to 51.7 in November from 50.3 in October. Details were discussed here: http://trueeconomics.blogspot.ie/2014/12/1122014-russia-manufacturing-pmi.html Overall, Russian manufacturing expanded at the second fastest pace of all BRIC economies in November.
• China Manufacturing PMI disappointed as well - coming in at 50.0 in November 2014 down from already anaemic 50.4 in October. 3mo average is at 50.2 - very weak and 3mo average through August was 50.5. 3mo average through November 2013 was 50.7 - also weak by Chinese standards.
• India Manufacturing PMI posted a significant improvement. In October 2014, PMI reading was 51.6 - the fastest growth of all BRIC economies, with November reading rising to 53.3 - again the fastest growth in the BRIC economies. 3mo average through november 2014 is at 52.0 against 3mo average through August of 52.1 and an improvement on 3mo average through November 2013 at 50.2.

Table summarising Manufacturing PMI for October-November:

All in, strong gains in India continuing, while Russia posted surprising uplift in activity in November that requires future confirmation of an upward trend. Brazil is gravely weak, and getting weaker, while China is on an edge of slipping into contraction.