1/10/18: BRIC Manufacturing PMI dips down in 3Q 2018

BRIC Manufacturing PMIs turned south in 3Q 2018 in line with Global trend, but leading that trend to the downside. Per latest data through September 2018:

Russia Manufacturing PMI averaged miserly 49.0 in 3Q 2018, down from anaemic 50.2 in 2Q 2018. This was the lowest quarterly reading since 3Q 2015 when the Russian economy was in an official recession. Russia is the only BRIC economy nominally in contraction territory, when it comes to PMIs-signalled manufacturing sector activity, and 49.0 is statistically close to being sub-50 reading as well.

Brazil’s Manufacturing PMI remained broadly unchanged on 2Q 2018 reading of 50.9 at 50.8 in 3Q 2018. Although notionally above 50.0 mark, statistically, the reading was not significantly different from zero growth signal of 50.0. This means that both Russian and Brazilian economies registered deteriorating PMIs over two consecutive quarters in the case of Brazil and 4 quarters in the case of Russia.

China Manufacturing PMI was at disappointing 50.5 in 3Q 2018, down from a weak 51.1 reading in 2Q 2018. This marks the worst reading in China PMI in five quarters. As with Brazil, China’s Manufacturing PMI for 3Q 2018 was not statistically distinct from 50.0.

India Manufacturing PMI was the only one that remained statistically in expansion territory at 52.1 in 3Q 2018, basically unchanged on 52.0 in 2Q 2018 and barely up on 51.8 in 1Q 2018.

Meanwhile, Global Manufacturing PMI averaged 52.5 in 3Q 2018, down from 53.2 in 2Q 2018 and 54.0 in 4Q 2017 and 1Q 2017. All in, Global PMI has finished 3Q 2018 at the lowest level in 8 consecutive quarters.

9/10/17: BRIC Services PMI 3Q 2017: Another Quarter of Weaker Growth

Having covered 3Q 2017 figures for BRIC Manufacturing PMIs in the previous post, let’s update the same for Services sector.

BRIC Services PMI has fallen sharply in 3Q 2017 to 50.8 from 52.1 in 2Q 2017. This is the lowest reading since 2Q 2016 (when it also posted 50.8). The drivers of this poor dynamic are:

• Brazil Services PMI remained below 50.0 mark for the 12th consecutive quarter, rising marginally to 49.5 in 3Q 2017 from 49.0 in 2Q 2017. Current reading matches 1Q 2015 for the highest levels since 1Q 2014. Statistically, Brazil Services PMI has been at zero or lower growth since 1Q 2014.
• Russia Services PMI fell to 54.0 in 3Q 2017 from 56.0 in 2Q 2017 and 56.8 in 1Q 2017, indicating some cooling off in otherwise rapid expansion dynamics. The recovery in Russian Services sectors is now 6 quarters long and overall very robust.
• China Services PMI decline marginally from 52.0 in 2Q 2017 to 51.6 in 3Q 2017. This is consistent with trend established from the local peak performance in 4Q 2016. Overall, Chinese Services are showing signs of persistent weakness, with growth indicator falling below statistically significant reading once again in 3Q 2017.
• India Services sector has been a major disappointment amongst the BRIC economies, with Services PMI falling from 51.8 in 2Q 2017 to a recessionary 48.0 in 3Q 2017. The Services PMIs for the country have been rather volatile in recent quarters, as the economy has lost any sense of trend since around 4Q 2016.

Table below and the chart illustrate the changes in Services PMIs in 3Q 2017 relative to 2Q 2017 and the trends:

With Global Services PMI remaining virtually unchanged (at 53.9) in 3Q 2017 compared to 2Q 2017 (51.8), with marginal gains on 1Q 2017 (53.6) and 4Q 2016 (53.5), the BRIC Services sectors are showing no signs of leading global growth to the upside since 3Q 2016. For the sixth consecutive quarter, Russia leads BRIC Services PMIs, while Brazil and India compete for being the slowest growth economies in the services sectors within the group.

As with Manufacturing, BRIC Services sectors show no signs of returning to their pre-2009 position of being the engines for global growth.

Stay tuned for Composite PMIs analysis for BRIC economies.

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.

10/4/17: BRIC Composite PMIs 1Q 17: Not Keeping Up With Global Growth

In two previous posts, I have covered the 1Q 2017 data for Manufacturing PMIs and Services PMIs for BRIC economies. Both indicators provided little hope that world's largest emerging economies are generating a positive growth momentum consistent with stronger global economic growth.

The same is confirmed by the Composite PMIs:

Brazil's 1Q 2017 Composite PMI came in at 46.7, up on 46.1 in 4Q 2016, but still below the stagnation line. In simple terms, Brazil's Composite PMIs have now signalled negative growth for 12 consecutive quarters. Improved 1Q 2017 reading is consistent with continued and strong contraction in the economy, albeit a contraction that is less pronounced than in previous quarters.

Russia's Composite PMI posted a reading of 56.7, marking the strongest growth performance for the economy since 4Q 2006. Predictably, given both Manufacturing and Services PMIs as discussed in above-linked posts, Russian economy has outperformed in 1Q 2017 global economic growth momentum and is currently the strongest BRIC economy for the fourth consecutive quarter.

India's Composite PMI came in at 50.8, up marginally on 50.7 in 4Q 2016. This marks the second consecutive quarter of Composite PMI readings for India that are statistically indistinguishable from the stagnation line of 50.0. There is little good news in the data from India, where the fallout from the disastrous de-monetisation campaign by the government has been taking its toll.

Chinese Composite PMI stood at 52.3 in 1Q 2017, down from 53.1, but still the second highest since 1Q 2013. In simple terms, this means that the Chinese economic growth is not accelerating off 4Q 2016 dynamics, suggesting that the economy has now exhausted any momentum gained on foot of a massive credit bubble expansion in modern history.

Chart below illustrates the dynamics:

As shown above, Russia is the only BRIC economy currently generating upward supports for global growth.

When we consider individual sectoral indices, as shown in the chart below, BRIC Manufacturing sector is now pushing global growth momentum down, while BRIC Services sector is co-moving with the global growth, but provides no positive momentum to global economic expansion:

Finally, using monthly data (100=zero growth) for the BRIC economies index of economic activity (computed by me based on Markit and IMF data), the chart below shows just to what extent does Russian growth momentum dominates rest of the BRIC economies dynamics:

In summary, BRIC economies remain negative contributors to the global economic growth, with BRIC economies posting overall positive, but weak growth across the two key sectors.

10/4/17: BRIC Services PMI 1Q 2017: Another Weak Quarter

Yesterday, in my analysis of BRIC Manufacturing PMIs for 1Q 2017, I showed that 51.1 for 1Q 2017, BRIC Manufacturing PMI average came down marginally on 51.2 in 4Q 2016, although up on 49.2 reading for 1Q 2016. Russia was the only economy posting Q1 2017 Manufacturing activity in line with Global Manufacturing dynamics and BRIC as a group were exerting downward pressure on global manufacturing sector.

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

Looking at Services PMIs next:

Brazil's Services PMI for 1Q 2017 averaged at 46.4, which is somewhat better than 44.5 average for 3Q 2016 and 4Q 2016 and stronger than 40.0 average for 1Q 2016. In simple terms, Brazil's Services activity continued to shrink and shrink rapidly in 1Q 2017, although the rate of contraction moderated. All in, Brazil's Services PMIs have now been in sub-50 territory for 10 consecutive quarters, two quarters shorter than Brazil's Manufacturing sector. The long-running and deep recession in Latin America's largest economy is continuing, although there are some very fragile signs that it might come to an end in the foreseeable future, as both Manufacturing PMI (at 49.6 in March) and Services PMI (at 47.7 in March) are showing signs of recovery.

Russia Services PMI for 1Q 2017 came in at a blistering pace of 56.8, up on already significant growth in 4Q 2016 at 54.6 and significantly above 1Q 2016 reading of 50.0. All in, this is the fourth consecutive quarter of Services PMIs above 50.0, with all four quarters reading statistically significant for positive growth. Russia is leading BRIC contribution to global growth in both Manufacturing and Services sectors, judging by PMIs.

Indian Services PMI was at 50.2 in 1Q 2017, which not statistically distinct from zero growth marker of 50.0, but up on 49.3 in 4Q 2016. In 1Q 2016 the Services PMI averaged 53.6 which was positive for growth. Indian economy has been hitting some trouble waters for the last two quarters, something I remarked upon in the post covering Manufacturing PMIs linked above. While Services are showing signs of stabilisation, the recovery is not yet evident in the data and is lagging Manufacturing sector performance.

China's Services PMI reading in 1Q 2017 disappointed those who hoped that 2016 credit explosion would set stage for a robust economic growth recovery. With Manufacturing PMI growth signal stuck at the same level in 1Q 2017 as in 4Q 2016, Services PMI reading for 1Q 2017 was actually below the 4Q 2016 reading (52.6 vs 53.0). Given that the index never once slipped below 50 in the history of the series, as well as given the moments of the underlying distribution, 52.6 reading is statistically indistinguishable from zero growth conditions. Thus, although posting the second strongest, amongst the BRIC economies, PMI reading for 1Q 2017 after Russia, Chinese Services sector was a relative negative for global growth momentum.

Chart and table below summarise some of the dynamics discussed earlier:

In summary, as shown above, global PMIs are supported to the upside only by Russian Services PMI dynamics, with Chinese Services PMIs providing virtually no momentum to global Growth, and both India and Brazil contributing negatively. Overall, thus, BRIC economies remain weak and under-perform global growth.

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.

8/2/17: BRIC Composite PMIs: Russia Sustains Growth Momentum in January

Having covered January PMIs for BRIC economies for manufacturing sector (http://trueeconomics.blogspot.com/2017/02/2217-bric-manufacturing-pmis-russia.html) and for services sector (http://trueeconomics.blogspot.com/2017/02/2217-bric-manufacturing-pmis-russia.html), let’s update data for Composite PMI indicator.


Overall, only one BRIC economy - Russia - provided solid support to global growth in January, with China providing a slight downward momentum and India and Brazil leading to a significant downside momentum.

Brazil’s Composite PMI continued to signal severe contraction at 44.7 in January, tanking deeper into a recessionary territory compared to December 2016 reading of 45.2. This makes 23rd consecutive month of contraction. Brazil registered recessionary PMIs in both Services and Manufacturing and in both sectors, January readings were no better than December. In simple terms, there is no light in the end of Brazil’s recessionary tunnel, yet.

Russia Composite PMI posted a robust upward improvement, rising from an already fast-paced 56.6 in December 2016 to 58.3 in January 2017, marking 12th consecutive month of above 50 readings and the highest Composite PMI level on record. Impressively, both Services and Manufacturing sectors PMIs rose in January, compared to December.

Chinese Composite PMI posted a significant slowdown in growth from 53.5 in December 2016 to 52.2 in January. Still, the index remains above 50 mark for 11th month in a row. Chinese Manufacturing PMI declined substantially in January, while Services posted a very modest drop. Importantly, Chinese Manufacturing PMI has now dropped below statistically significant above-50 reading, after just one month at the level close enough to being almost statistically significant.

Third month of sub-50 readings in Services PMI and anaemic 50.4 reading in manufacturing meant that India’s Composite PMI remained below 50.0 marker for the third consecutive month, posting 49.4 in January compared to 47.6 in December. Despite index improvement (signalling slower rate of economic activity contraction), Indian economy remains in recessionary dynamics, courtesy of the completely botched self-inflicted policy mayhem - the misguided demonetisation.

Table below summarises the most recent movements in Composite PMIs

Chart below shows Composite PMIs for BRICs (quarterly basis) against the Global Composite PMI, showing that the current global growth trend is still being supported by the BRICs, with primary positive impact coming from Russian figures.

The following chart summaries the sheer magnitude of Russian growth momentum compared to BRICs-ex-Russia:

However, the good news is that despite slippage in India and extreme weakness in Brazil, overall BRIC’s contribution to global growth continues to trend upward, albeit with some significant moderation since mid-4Q 2016:

7/2/17: BRIC Services PMIs: Supporting Global Growth

BRIC Services PMIs for January signal continued expansion on world’s largest emerging economies.

Brazil Services PMI remained at a disappointing 45.1 in January, same as in December 2016, implying relatively steep rate of economic contraction in the sector. This marks 23rd consecutive month of sub-50 readings for the indicator, almost on par with 24 months-long sub-50 readings run for Manufacturing. Current 3mo moving average for Services PMI is at 44.9, marginally up on 44.0 3mo average for the previous period and on 44.5 3mo average through January 2016. Current 3mo average for Services is in line with the 45.1 3mo average for Manufacturing. Both sectors are signalling continued steep decline in the economy battered by 2 years of recessionary dynamics and no signs of a light at the end of that tunnel.

In contrast to Brazil, Russia Services PMI posted another steep acceleration in growth, rising from 56.5 in December 2016 to 58.4 in January 2017, the highest reading in 102 months. As a reminder, Russia’s Manufacturing PMI reached 70-months high in January at 54.7. Russian services sector now posted 12 consecutive months of above 50 readings, implying that Russian recession is now over (with Manufacturing PMI reading above 50 for 6 months in a row). 3mo moving average through January is at blistering 56.5, up on already solid 3mo previous at 53.1 and significantly up on 48.2 3mo average through January 2016.

Chinese Services PMI posted a slight moderation in growth from 53.4 in December 2016 to 53.1 in January, with current 3mo average at 53.2, up on 52.2 average for the previous 3 months’ period and on 51.3 3mo average through January 2016. Chinese Services PMI has never registered a sub-50 reading in its history.

India Services sector PMI continued to post sub-50 readings for the third month in a row, coming in at 48.7 in January, compared to 46.8 in December. On a 3mo average basis, January reading is at 47.4, which stands in sharp contrast to the sector fortunes in the previous 3 months period (53.7 average) and compared to January 2016 3mo average at 52.7.

Table below summaries both Manufacturing and Services PMIs for the BRICs:

Chart below shows dynamics in monthly Services PMIs

While the second chart shows current 1Q 2017 performance in quarterly data context.

Key point of the above chart is the strong co-movement between Global PMI and the Russian and Chinese PMIs for the sector. As I noted back in September, this is a strongly positive sign of global economy gaining some much needed growth momentum.

Clearly, Russia leads growth momentum within BRICs, with China providing supporting uplift. India and Brazil act as major drags on global growth across the Services sector.

Note: I covered BRIC Manufacturing PMIs in an earlier post here: http://trueeconomics.blogspot.com/2017/02/2217-bric-manufacturing-pmis-russia.html.

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.

5/1/17: BRIC Composite PMIs: 4Q 2016 & FY 2016

I posted my analysis of BRIC quarterly Manufacturing PMIs here: http://trueeconomics.blogspot.com/2017/01/4117-bric-manufacturing-pmi-4q-2016-and.html and BRIC quarterly Services PMIs here: http://trueeconomics.blogspot.com/2017/01/4117-bric-services-pmis-4q-fy-2016.html.


Now, let’s look at Q4 2016 and FY 2016 Composite PMIs for BRIC economies.

For the first time since 1Q 2013, both services and manufacturing sectors of the BRIC economies are now in a stistcically significant expansion, as shown in the Chart below and summarised in the table that follows:

Composite PMIs as follows:

Brazil remains key underperformed, posting a worsening recession reading of 45.1 in 4Q 2016 compared to 3Q 2016. This was still and improvement on 41.6 reading in 4Q 2015. Despite this, across FY 2016, Composite PMI for the Brazilian economy averaged just 43.1, which is worse than 45.2 reading for the FY 2015 and 49.8 reading for the FY 2014. Brazil’s Composite PMI is now in 11 consecutive quarters of sub-50 readings (12 consecutive quarters of zero or negative growth, if we control for statistical significance).

Russia has posted a third consecutive quarter of growth, with accelerating positive dynamics. In 4Q 2016, Russian Composite PMI run at a blistering pace of 55.4, up on 53.2 in 3Q 2016 and 52.0 in 2Q 2016. This is the fastest pace of expansion since 2@ 2008. As the result, FY 2016 Composite PMI for the Russian economy came in at 52.6, signalling relatively robust rate of growth - the fastest pace of growth for FY 2016 for any BRIC economy. In 2015, FY reading was 48.8 (second worst in the BRIC group) and in 2014 it was 48.9 (the worst performance in the BRIC group). Based on three consecutive quarters of above 50 (statistically significant) PMIs, we can now call the end of the Russian recession, although risks of a reversal to the downside still remain, primarily due to lags in recovery in manufacturing sector.

Chinese Composite PMI came in at 53.1 in 4Q 2016, up on 51.7 in 3Q 2016 and marking the highest reading for any quarter since 4Q 2010. The expansion has now been sustained over 4 consecutive quarters, albeit once we adjust for statistical significance, growth in Chinese economy as measured by the Composite PMIs is only two quarters deep. FY 2016 reading is now at 51.4 - third fastest in the BRIC grouping, and an improvement on 2015 FY reading of 50.3. FT 2016 result posted higher rate of growth than in 2013-2015.

Indian Composite PMI came in at 50.7 - a sharp slowdown from 53.1 in 3Q 2016. The PMI reading is now statistically indistinguishable from 50.0 - the first time this happened since 2Q 2015. FY 2016 average Composite PMI for the Indian economy came in at 52.1, the second fastest pace of growth in the BRIC economies group and an improvement on 51.7 in 2015. The pace of growth signalled by the Composite PMIs in 2016 was the fastest over the last 4 years.

Chart below illustrates trends in quarterly Composite PMIs

Key take aways:

1) Russian Composite PMI is now signalling rates of growth consistent with pre-2H 2008 data. If trend to the upside is confirmed, Russian economic recovery will be not only sustained, but robust. Last two quarters of Composite PMI readings suggest growth in the range of 2.5-3 percent per annum, which exceeds even the rosier forecasts for 2017 at 1.7 percent. Interestingly, unlike in the case of China, Russian economic recovery is not based on either monetary or fiscal stimuli. Monetary policy in Russia remains fully focused on containing inflation and current interest rates are approximately 2.5-3.5 points too high to support even modest growth in investment. Meanwhile, fiscal policy remains conservative and the Government has been extremely reluctant to ease fiscal purse strings, absent access to normal funding markets, given the levels of geopolitical uncertainty, and having little support for its budget from primary commodities prices.

2) Chinese Composite PMI is also showing signs of a break-away fro  the recent trends. However, the reading is still only one quarter in the duration and is clearly anchored to aggressive monetary and fiscal easing. As the result, I am reluctant to call this a structural trend change.

3) India’s one quarter fall in Composite PMIs is a signal to watch. Currently, it is too early to call this a shift in a trend and there are non-structural reasons that might be behind this growth slowdown (e.g. de-monetization policey etc), but over 2Q 2014-1Q 2016 and less so during 2Q-3Q 2016, Indian economy was supportive of stronger growth across BRIC group and contributed positively to BRIC share of Global GDP expansion. The 4Q 2016 reading is putting this into question.

4) Brazil remains in deep economic recession. Over the last 5.5 years, Brazil’s Composite PMI has averaged just 48.3, with the last three years average reading of just 46.0.

4/1/17: BRIC Services PMIs: 4Q & FY 2016

I posted my analysis of BRIC quarterly Manufacturing PMIs here: http://trueeconomics.blogspot.com/2017/01/4117-bric-manufacturing-pmi-4q-2016-and.html.

Now, let’s look at Services sector. Table below summaries latest data

Brazil Services PMI for 4Q 2016 came in at 44.5, unchanged on 3Q 2016 and marking rapid rate of contraction in the country’s Services economy. This is 9th consecutive quarter of sub-50 readings, and 12th consecutive quarter of PMI readings statistically at or below 50.0 mark. Services recession continues to be worse than Manufacturing recession for the seventh quarter in a row.

Russian Services PMI ended 2016 with a bang. 4Q 2016 reading averaged 54.6, up on 3Q reading of 53.8. FY 2016 average is solid 52.9, which is a big contrast to 48.5 FY average for 2015. This is the strongest rate of quarterly average growth since 1Q 2013. Overall, dynamics in the Services sector support the view that Russian Services economy has now moved solidly out of the recession and into broad expansion. To translate this into overall economic outlook for growth, however, we need at least one (preferably two) quarters of above 52 readings in Manufacturing.

Chinese Services PMI also gained strength in 4Q 2016, ending the last quarter at an average of 53.0, up on 3Q 2016 reading of 51.9. FY 2016 average reading for the sector is robust 52.2 which is marginally better than 52.0 average for the the FY 2015.

India Services posted a surprising rapid contraction, falling for 4Q 2016 to 49.3 from 52.9 average for 3Q 2016. This marks the first sub-50 reading since 2Q 2015 and is hard to interpret as anything but a volatility induced by monetary reforms and a couple of other policy blunders. Still, 2016 FY average for the sector is at 51.8 which is virtually unchanged compared to 51.7 average for FY 2015.

Looking at the trends:

1) Russian rate of Services sector growth is now on par with pre-crisis period (2013 and earlier). China is taking second place in terms of Services growth momentum, albeit its expansion is both weaker than Russian, and sustained by superficial means (monetary and fiscal stimuli - not present in Russia).

2) India is on a sharp volatility down, which needs to be confirmed if we are to talk about general weaknesses in the economy.

3) Brazil remains the sickest of all BRICS, confirming the same positioning in country Manufacturing.

4) Again, tracing out longer term trends, Russian general slowdown set on around 2Q 2013 in Services has now been broken to the upside. While Chinese Services continue to trend along shallow growth line, and India’s trend (highly volatile) is suggesting some weaknesses in growth. Brazil’s Services weaknesses (turned decline in 4Q 2014) that started around 4Q 2012 - 1Q 2013 is still pronounced.

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: Composite Activity - August

In the previous post I promised to update Composite PMI indicators for BRIC economies, so here it comes.

The good news is that Russia and India are posting Composite readings that are statistically significantly above 50.0 for the second month in a row. For Russia, this is the third consecutive month of Composite PMI readings statistically above 50.0 and for India - second.

The bad news is that Brazil acts as big drag on BRIC growth with severely depressed Composite PMI reading for 18th month running. Worse, Brazil's position has deteriorated in August compared to July.

Meanwhile, China posted virtually unchanged Composite PMI in August compared with July, with both readings being very close to signalling statistically significant expansion. Last time China posted statistically significant reading above 50 line was in August 2014.

Couple of charts to illustrate the trends:

As the chart above indicates, Russia remains a driver to the upside in terms of BRIC economies PMIs, with Brazil acting as a major drag and China as a driver toward lower growth.

Good news: across overall BRIC grouping, growth remains positive (albeit very shallow) and is ticking up (albeit with increased volatility). Bad news: since 1Q 2013, BRIC economies as a group are showing extremely low growth performance compared to their historical trends (red box in the chart below).

3/3/16: BRIC Composite Activity - February

On a cumulative basis (based on Composite PMIs for each country), the BRIC economies as a group have posted a very disappointing performance in February 2016.

Note: for this index, 100.0 is a zero growth marker.

Russian economy Composite Indicator posted a positive upside surprise, rising from a contractionary reading of 96.8 in January to a weakly-expansionary reading of 101.2. 3mo average through February 2016, however, remains below 100 line at 97.9, which is weaker than the 3mo average through November 2015 at 100.3. The details of Russian Manufacturing sector woes are covered here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html, while details of Russian Services and Composite PMIs upside are covered here: http://trueeconomics.blogspot.com/2016/03/3316-russia-services-composite-pmi.html.

As a result, Russian economy acted as a factor pushing up BRIC rates of growth in February:

In contrast with Russia, Chinese Composite Indicator posted a significant contraction in February, falling from 100.2 (zero growth) in January 2016 to 98.8 (weak contraction) in February. On a 3mo average basis, the index is now at 99.3 for the period through February 2016, up marginally on 98.9 reading for the 3months through November 2015, but down on 102.4 reading for the 3mo average through February 2015. Details of Chinese Manufacturing PMIs are covered here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html, while details of Services and Composite PMIs are covered here: http://trueeconomics.blogspot.com/2016/03/3316-china-services-composite-pmi.html.


India’s Composite Indicator fell from 106.6 in January to 102.4 in February, signalling major slowdown in the rate of economic expansion. 3mo average through February 2016 is at 104.1, reflecting robust growth in January, and up on 102.9 3mo average through November 2015, but below 105.3 reading for the 3 months period through February 2015. The weakness in the Indian economic growth is highlighted by comparison to the historical average, which stands at 109.5.

Per Markit: “February data showed that services firms and goods producers alike registered weaker increases in activity. …Falling to a three-month low of 51.4 in February, from 54.3 in January, the seasonally adjusted Nikkei Services Business Activity Index highlighted a softer expansion of output that was only marginal. Where growth was seen, businesses reported higher levels of incoming new work. Although new orders at services firms continued to rise in February, the rate of expansion eased to the weakest since last November as firms reportedly faced strong competition for new work during the month. A quicker increase in order book volumes in the manufacturing economy was insufficient to prevent growth of private sector new orders from easing to a three-month low.”

Conditions in Indian Manufacturing are covered in detail here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html.


Meanwhile, Brazil remained the sickest economy in the BRIC group. Composite Indicator for Brazilian economy sunk to an all-time low of 78.0 from an already recessionary 90.2 in January. As the result, 3mo average for Brazil’s Composite Indicator was at 85.3, down on already extremely weak 86.6 recorded over the 3 months through November 2015 and on 100.1 3mo average through February 2015.

According to Markit: “The downturn in the Brazilian economy took a noticeable turn for the worse in February. Business activity, new orders and employment all fell at, or near to, the fastest rates since the combined manufacturing and service survey began in March 2007. Companies continued to link the adverse operating environment to the ongoing economic, financial and political crises. …Accelerated downturns were registered at manufacturers and service providers alike, although the slump at services companies was especially severe. At 36.9 in February, down from 44.4 in January, the seasonally adjusted Markit Services Business Activity Index posted its lowest reading in the nine-year survey history. Business activity has fallen in each of the past 12 months.”

Brazil’s Manufacturing PMIs were covered in detail here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html.

The summary of changes in both manufacturing and Services sectors across all BRIC economies is here:

Thus, overall, global GDP-weighted BRIC PMI Indicator (computed by me) fell to 98.4 - signalling moderate or mild contraction, down from January reading of 100.6. The Index is now registering sub-100 readings in seven out of nine last months. Worse, BRIC economies last posted a statistically significant reading for growth back in December 2014. On a 3mo basis, 3 months average through February 2016 is at 99.1, which is basically unchanged on 3mo average through November 2015 (99.0) and significantly lower than the 3mo average through January 2015 (101.8). Starting with February 2015, the index has been averaging zero growth.

3/3/16: China Services & Composite PMI: February

China Services PMI fell to 51.2 in February, from January’s six-month high of 52.4, pointing to a much slower rate of growth than the historical series average of 55.0. This comes on foot of Manufacturing PMI registering an outright contraction in February, with the rate of reduction quickening to the steepest since September 2015 (details here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html).

Services PMI 3mo average through February was 51.3, which is basically flat on 51.2 recored in 3mo period through November 2015 and lower than 3mo average through February 2015 (52.4).

Per Markit: “New business growth also slowed across the service sector in February after a solid rise at the start of the year. Furthermore, the latest increase in new orders was weaker than the long-run trend and only modest, with some panellists commenting on relatively subdued client demand. New orders continued to decline at manufacturing companies, and at a slightly quicker rate than at the start of 2016.”

After posting a weak stabilisation in January (at 50.1), the Composite PMI fell to a recessionary level of 49.4 in February, indicating “a renewed fall in total Chinese business activity in February… to signal a marginal rate of contraction.”
 On a 3mo basis, 3mo average through February 2016 was at 49.7, up on 3mo average through November 2015 (49.5) and down on 3mo average through February 2015 (51.2). Again, last six months we saw averages well below historical average (52.9).

Per Markit, “slower increases in both activity and new orders contributed to a weaker expansion of service sector staff numbers in February. Companies that reported higher staff numbers generally mentioned hiring new employees in line with new order growth. Job shedding meanwhile intensified across the manufacturing sector in February, with the latest decline in workforce numbers the sharpest since January 2009. As a result, composite employment fell at a rate that, though modest, was the quickest in six months.”

This clearly signals that troubles are not over for Chinese economy and also suggests that currently projected rates of growth for the world’s second largest economy are way off the mark. Composite PMIs have now posted sub-zero growth signals in five out of the last seven months, with one other month reading being basically consistent with zero growth. On a Composite indicator basis, China is now the second weakest economy in the BRIC group after Brazil, with Russia overtaking itm having posted a composite index reading of 50.6 in February. Over the last 12 months, the same situation prevailed in July-September 2015, and in November 2015 the two countries were tied for the second worst performance reading.

3/3/16: Russia Services & Composite PMI: February

Russian Services PMI came in with surprising upside that bucked the trend in Manufacturing (see links here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html), posting 50.9 reading in February, up from 47.1 in January. On a 3mo basis, however, 3mo average through February remains below 50.0 expansion line at 48.6, which is actually poorer than 49.6 3mo average through November 2015, although much better than 43.7 3mo average through February 2015. In simple terms, February uptick in growth in Services is fragile, unconfirmed, and at this stage does not constitute a robust signal of economic stabilisation.

Per Markit: “Russian service providers reported a slight increase in their business activity levels during February, driven by an expansion in new orders. However, a rise in new projects could not prevent a further sharp deterioration in outstanding business in the sector. Meanwhile, job cuts were evident while price pressures continued to persist.” Still, “the latest increase ends a four month sequence of contraction. Panel members partly linked rising output to an increase in new export orders, the result of a depreciating rouble.”

Net summary is: February reading for Services is encouraging, but is not yet consistent with sustained stabilisation in the economy. 

This has been confirmed by the Russia’s Composite Output Index which also returned to expansion territory in February for the first time in three months. Per Markit: “however at 50.6, up from January’s 48.4, the latest upturn was relatively weak.” On a 3mo basis, the Composite index is still below 50 at 49.0, which is lower than Composite Index average for the 3 months through November 2015 (50.2) although strongly ahead of the abysmal reading for the 3mo period through February 2015 (46.2).

“A higher level of new business was reported by Russian service providers during February, the first increase in five months. However, the pace of
growth was relatively weak. Anecdotal evidence suggested that the expansion reflected the introduction of new products across the sector. Meanwhile, a slight rise in volumes of new orders were reported by manufacturers this month.”

Again, on the net, Composite PMI figures show the return to growth to be unconvincing at this stage. We will need at least 3 consecutive months of above 50 readings to make any serious judgement as to the reversal of recessionary dynamics in Russian economy.

4/2/16: BRIC Composite PMIs: January

In two recent posts, I covered

• Services PMIs for BRIC economies http://trueeconomics.blogspot.com/2016/02/3216-bric-services-pmis-for-january.html and
• Manufacturing PMIs for BRCI economies http://trueeconomics.blogspot.com/2016/02/1216-bric-manufacturing-pmi-january.html

Now, let’s take a look at the Composite PMIs.

As noted in a more in-depth analysis, here: http://trueeconomics.blogspot.com/2016/02/3216-russian-services-composite-pmi.html, Russia’s Composite Output Index remained in contraction territory in January, posting a reading of 48.4, up on 47.8 in December 2015. The Composite index was helped to the upside by the Manufacturing PMI which was also in a contractionary territory at 49.8, but above the very poor performance levels of the Services PMI. January marked second consecutive month that both Manufacturing and Services PMIs for Russia were below 50.0. Last time that this happened was in December 2014-January 2015 and in February-March 2015 - in other words, at the dire depth of the current crisis. Overall, Russia is once again (second month in a row) ranks as the second lowest BRIC performer in terms of Composite PMI reading, ahead of only a complete basket case of Brazil.

As also noted in an in-depth analysis here: http://trueeconomics.blogspot.com/2016/02/2216-china-services-composite-pmis-for.html due to a substantial improvement in the Services PMI, China’s Composite PMI signalled stabilisation in overall economy-wide business activity in January, with Composite Output Index registering fractionally above the no-change 50.0 value at 50.1, up from 49.4 in December. However, overall, Composite PMI of China has been above 50.0 in only two of the last 6 months and on both occasions, index readings were not statistically distinguishable from 50.0. 3mo average through January for Composite PMI stood at 50.0 (zero growth) against 48.9 average through October 2015 and 51.3 average through January 2015. In other words, the economy, judging by Composite PMI might be closer to stabilising, but growth is not exactly roaring back.


India’s Composite PMI rose from 51.6 in December to an 11-month high of 53.3 in January. Per Markit, “Lifting the index were a rebound in manufacturing production as well as stronger growth of services output.” 3mo average for Composite reading is now a5 51.7, slightly down from 52.3 3mo average through October 2015 and compared to 52.8 3mo average through January 2015. With manufacturing and services order books now in an expansionary territory, “growth of new business across the private sector as a whole was at a ten-month high… Higher workloads encouraged service providers to hire additional staff in January, following a stagnation in the prior month. …Meanwhile, manufacturing jobs rose at a marginal rate.” While overall Indian economy has clearly returned to robust growth, underlying conditions remain relatively weak by historical standards. 3mo average Composite index at current 51.7 is well below the historical average of 54.8. India remained on track to being the strongest economy in the BRIC group overall for the 7th month in a row.

In the case of Brazil’s Composite PMIs, the index registered continued rate of contraction rate of contraction for 11th month in a row - a record that is worse than that for Russia. Over the last 24 months, Brazil’s Composite PMI has managed to reach above 50.0 on only 5 occasions, against Russia’s Composite PMI’s 7. Over the last 12 months, Brazil’s Composite PMI was above 50.0 only once, with Russian counterpart rising above 50.0 in 4 months. On a 3mo average basis, Brazil’s Composite PMI stood at 44.5 in January 2016, slightly better than 43.4 reading for the 3mo period through October 2015, but below 49.3 reading attained in January 2015. Per Markit: “January saw Brazil’s economic recession weighing on the private sector for another month …the seasonally adjusted Composite Output Index remained in contraction territory, highlighting a further sharp drop in activity. Moreover, the current sequence of continuous downturn has been extended to 11 months, the longest in almost nine years of data collection.” Both Services and Manufacturing sectors order books posted contractions, meaning that “the private sector as a whole posted an eleventh successive monthly decline in new business. Firms reported tough economic conditions and a subsequent fall in demand.” Once again, Brazil retained its dubious title as the worst performing BRIC economy - a title it has been holding for the last 11 months.

Charts and table to illustrate:

As shown in the above charts, Russia is now exerting a downward momentum on overall BRIC growth dynamics for the second month in a row. However, due to improvements in India and China, BRICs as a whole are now adding positive support for global growth. That support is relatively new and still fragile enough not to call a change in trend in the series.

6/1/16: BRIC Composite PMIs: December

In recent posts, I covered Manufacturing sector PMIs for BRIC economies based on monthly data and Services Sector PMIs here.

Now, let’s consider Composite PMIs for BRIC:


Brazil Composite PMI fell from 44.5 on November to 43.9 in December, As the result, the economy posted 10th consecutive month of sub-50 readings, and since April 2014, Brazil’s economy registered above 50 readings in only three months, with none of these three readings being statically significantly different from 50.0. The last time Brazil’s Composite PMI posted reading statistically consistent with positive growth was in February 2013.

In December, both Manufacturing and Services sectors indicated contracting activity, with Markit concluding that “Private sector activity in Brazil continued to plunge in December as a deepening economic retreat contributed to a further contraction in new business. The seasonally adjusted Composite Output Index fell from 44.5 in November to 43.9 at the year end, pointing to a sharp and stronger rate of reduction. Whereas the downturn in manufacturing production eased (though remained severe), services activity declined at a quicker pace.”

Over 4Q 2015, Brazil Composite PMI averaged 43.7 which is about as bad as the average of 43.6 achieved in 3Q 2015 and much worse than already contractionary average of 49.0 posted in 4Q 2014.


Russian Composite PMI was covered in detail here. Overall, Russia’s Composite index slipped into contraction during December, falling to 47.8, from 50.5 in November, with the decline in output reflected across both manufacturing production and services activity. Overall, Russian economy’s composite PMI averaged 49.1 in 4Q 2015 which is much worse than 50.4 average for 3Q 2015. The data strongly suggests that not only did the economy failed to attain stabilisation, but that growth might have turned more negative in 4Q 2015.


Chinese Composite PMI also signalled declining business activity in December, falling to 49.4 from 50.5 in November. Overall, China posted four months of below 50 readings on Composite PMIs out of the last 5 months and the last time Chinese Composite PMI was consistent with statistically significant growth was in August 2014. In 4Q 2015, Chinese Composite PMI averaged 49.9, which is better than 3Q 2015 average of 49.2, but much worse than the 4Q 2014 average of 51.6. Unlike Russia and Brazil, which posted sub-50 readings across both Manufacturing and Services, China posted sub-40 reading in Manufacturing and above 50 reading in Services, That said, the Services reading was 50.2 - statistically consistent with zero growth - and the second weakest on record (the weakest point was 50.0 in July 2014).


India Composite PMI rose unexpectedly from November’s five-month low of 50.2 to a four-months high of 51.6 in December. Thus, per Markit, the index was “indicative of a rebound in growth of private sector activity. Whereas manufacturing production decreased for the first time since October 2013, services activity increased at an accelerated pace.”

Further per Markit: “Leading services activity to increase was a solid rise in incoming new work, one that was faster than that seen in November. Anecdotal evidence highlighted strengthening demand conditions. Conversely, manufacturing order books decreased, with panellists indicating that demand had been suppressed by the Chennai floods. Across the
private sector as a whole, new business inflows expanded at a faster pace that was, however,
modest.”

4Q 2015 Composite PMI for India stood at 51.5, down from 52.1 in 3Q 2015 and down on 52.2 average for 4Q 2014.


Overall Russia was a negative contributor to the BRIC Composite Activity Index dynamic in December, although overall ex-Russia group performance continued to deteriorate in December faster than in November, as indicated in the chart below:

Note: Composite Activity Index is based on my own calculations weighing BRIC economies by their shares of global GDP. The Index is based on a scale of 100=zero growth.

In 4Q 2015, average Composite Activity Index for BRIC ex-Russia was 96.7 which was marginally better than in 3Q 2015 (86.5) but worse than 101.8 average for 4Q 2014.

Overall 4Q 2015 BRIC Composite Activity Index stood at 99.0, down on 99.2 in 3Q 2015 and on 102.1 recorded in 4Q 2014. 

The chart below shows a clear downward trend in BRIC activity setting on from June 2014 and accelerating since May 2015.