6/6/21: BRIC PMIs for May: Volatile Growth and Surging Inflationary Pressures

 

BRIC PMIs for May 2021 show uneven pace of recovery within the group of the largest Merging and Middle Income economies and a uniform evidence of pressure on inflation side.

• Brazil: Manufacturing PMI is currently running at 53.0 for 2Q 2021 for two months into the quarter, down from 1Q 2021 reading of 55.9. This marks second consecutive quarter of decreases in Manufacturing sector activity in Brazil. Brazil Services PMI is currently running at a deeper recessionary reading of 45.6, compared to 1Q 2021 at 46.1. As the result, Brazil's Composite PMI fell from the already recessionary reading of 47.9 in 1Q 2021 to 46.9 in 2Q 2021 to-date. Prices, meanwhile continued to show severe inflation pressures. Per Markit: "The rate of input cost inflation across the private sector softened further from March's record high, but remained one of the strongest since composite data became available in early-2007. ... In contrast to the trend for input costs, there was a quicker increase in aggregate selling prices. In fact, the rate of charge inflation was the strongest seen in the series history. Manufacturers again saw the sharper rise, despite inflation here softening during May."
• Russia: Manufacturing PMI remains at the same level through the first two months of 2Q 2021 (51.2) as in 1Q 2021, implying steady, but relatively weak growth. That said, monthly numbers have been more volatile in 2Q 2021 so far (range of 50.4 to 51.9) compared to 1Q 2021 (range of 50.9 to 51.5). Russia Services PMI rose to a robust reading of 57.5 in May, pushing the quarterly average to 56.4 2Q 2021 so far, up on 1Q 2021 average of 53.6. All in, Russian PMIs for both sectors are now in the second consecutive > 50.0 readings territory - a good signal. Composite PMI rose to 55.1 in 2Q 2021 to-date, compared to 53.2 in 1Q 2021. This marks the highest composite PMI for any BRIC economy for 2Q 2021 to-date. Just as with global and rest-of-BRICs cases, Russian inflationary pressures were running high in May. per Markit: "Price pressures remained high in May, with rates of private sector cost and charge inflation quickening notably. Sharper supplier price hikes and greater fuel costs reportedly spurred increases in cost burdens."
• India: Manufacturing PMI slipped from 56.9 in 1Q 2021 to 53.2 in 2Q 2021 to-date, marking the second consecutive quarter of declining PMIs. May 2021 reading was at 50.8, signaling, statistically, zero growth conditions in the sector. Services PMI fell below 50.0 mark in May reaching 46.4, with 2Q 2021 reading so far standing at 50.2, down from 54.2 in 1Q 2021. Statistically, the 2Q 2021 reading to-date implies zero growth in the Services sector. As the result, India's Composite PMI fell to 51.8 in 2Q 2021 to-date, down from 56.4 recorded in 4Q 2020 and 1Q 2021. With domestic demand slipping, inflationary pressures remained high, but did not accelerate. per Markit: "The rate of input cost inflation at the composite level eased to a four-month low in May, with slower increases noted at manufacturing firms and their services counterparts. Aggregate selling prices rose moderately and at a rate that was similar to April's. The quicker rate of charge inflation was seen in the manufacturing industry."
• China: China Manufacturing PMI remains relatively robust in 2Q 2021 so far (52.0) compared to 1Q 2021 (51.0), with levels of activity somewhat higher than historical average (50.7). Meanwhile, activity in the Services sector has accelerated, with Services PMI rising from 52.6 in 1Q 2021 to 55.7 in 2Q 2021. The latest Composite PMI reading remains robust at 54.3 for the first two months of 2Q 2021, compared to 52.3 in 1Q 2021, and above, statistically, historical average of 52.6. On inflation, Markit note states: "Both the gauges for input costs and output prices rose higher into expansionary range, indicating tremendous inflationary pressure. ...  "Policymakers mentioned rising commodity prices at the State Council executive meetings on May 12 and May 19. They issued instructions about stabilizing commodity supplies and prices. ... Inflationary pressure would limit the room for monetary policy maneuvering, which could hinder the economic recovery. Some enterprises began to hoard goods in response to rising raw material prices, while others suffered raw material shortages. Supply chains were also significantly affected.""

Per Markit, globally: "Higher employment also reflected companies' efforts to combat rising capacity pressures. Backlogs of work expanded at the fastest rate in 17 years, with stronger increases at both manufacturers and service providers. Demand outstripping supply also led to increased price inflation. Input costs rose to the greatest extent since August 2008 and output charges at the quickest rate on record (since at least October 2009)."

Two charts to illustrate the above trends:

13/5/21: BRIC Composite PMIs April 2021: Recovery Fragile, Inflation Heating Up

April PMIs for BRIC economies show continued strengthening in the recovery in China and Russia, moderation in the recovery momentum in India and deepening collapse in the recovery in Brazil.

Since we are into the first month of the new quarter, there is not enough data to go about to meaningfully analyze quarterly dynamics. Hence, I am only looking at Composite PMIs:

PMIs in April run stronger, compared to 1Q 2021 averages for Russia (Services only), and China (Services and Manufacturing), while Brazil and India recorded deteriorating PMIs in both Manufacturing and Services, and Russia posted weaker Manufacturing PMI.

BRIC as a group underperformed Global PMIs in April in both Services and Manufacturing, although BRIC Services PMI in April was running ahead of Services PMI for 1Q 2021, and there was virtually no change in Manufacturing PMI for BRIC group in April compared to 1Q 2021 average. 

Global Composite PMI in April was 56.3, which is much higher than same period Composite PMIs for Brazil (44.5), Russia (54.0), China (54.7) and India (55.4).

Notable price pressures were marked in:

• China: "At the same time, inflationary pressures remained strong, with input cost inflation hitting its highest since January 2017, while prices charges rose solidly".
• India: "Supply-chain constraints and a lack of available materials placed further upward pressure on inflation. Input prices facing private sector companies rose at the sharpest pace in close to nine years. The quicker increase was seen among goods producers. Prices charged by private sector firms increased at the fastest pace since last November, but the overall rate of inflation was modest and much weaker than that seen for input costs."
• Russia: "The rate of input cost inflation slowed in April to the softest for three months. That said, firms continued to pass on higher costs to their clients, as charges rose at the fastest pace since January 2019".
• Brazil: "Meanwhile, input costs continued to increase sharply. The rate of inflation was the second-fastest since composite data became available in March 2007, just behind that seen in the previous month. Goods producers noted a stronger rise than service providers for the fifteenth straight month. Prices charged for Brazilian goods and services rose further, stretching the current sequence of inflation to nine months. The upturn was sharp and the fastest in the series history. The acceleration reflected a quicker increase in the manufacturing industry".

8/4/21: BRIC Composite PMIs 1Q 2021: A Mixed Bag for Recovery Votes

 

I covered BRIC Manufacturing PMIs for 1Q 2021 (https://trueeconomics.blogspot.com/2021/04/5421-brics-manufacturing-pmis-1q-2021.html) and BRIC Services PMIs (https://trueeconomics.blogspot.com/2021/04/8421-bric-services-pmi-1q-2021-slowing.html) in the two posts earlier.  Now, the round up analysis based on Composite PMIs:

• Brazil Composite PMI fell from 54.4 in 4Q 2020 to 52.1 in 1Q 2021, marking a slowdown in growth conditions in the economy. Quarterly activity in 1Q 2021 is still ahead of where it was in 3Q 2020 (51.6) and marks third consecutive quarter of growth. But, for the first time during this recovery period, Brazil Composite PMI is now below Global Composite PMI (53.43 in 1Q 2021).
• Russia Composite PMI increased from recessionary 47.7 in 4Q 2020 to still negative-growth (albeit statistically, indistinguishable from zero growth) 49.5 in 1Q 2021. Russian economy has now posted four quarters of contracting economic growth PMIs out of five quarters of the pandemic. Needless to say, Russian Composite PMIs are remaining well below Global Composite PMI as the did in 4Q 2020 as well.
• India Composite PMI slipped from 56.4 in 4Q 2020 to 55.7 in 1Q 2021 signaling slower, but still robust growth in the economy. India outperformed Global Composite PMIs in 4Q 2020 and 1Q 2021, the only two quarters of > 50 readings in India's case.
• China Composite PMI fell from 56.3 in 4Q 2020 to still robust 55.2 in 1Q 2021. Thus, China, like India, managed to outperform Global Composite PMIs in both of the last two quarters. Unlike India, China also beat Global Composite PMIs in 1Q and 2Q 2020 as well. Since Chinese economy was the only BRIC economy to regain its 2019 levels of activity back in 3Q 2020, the last two quarters of PMIs suggest strong rebound in the world's largest economy (or second largest one, depending on how one counts economic output).

8/4/21: BRIC Services PMI 1Q 2021: Slowing Growth Momentum

 Earlier this week, I posted on the latest PMI reports for BRIC economies for Manufacturing sector (https://trueeconomics.blogspot.com/2021/04/5421-brics-manufacturing-pmis-1q-2021.html).  Now, let's cover Services Sector 1Q 2021 PMIs. Remember, Markit - source of data - cover only monthly PMIs.

As reminder, Manufacturing PMIs fell in all BRIC economies except for Russia in 1Q 2021 compared to 4Q 2020. As the result, overall, BRIC Manufacturing Activity Index (GDP-weighted average of PMIs) fell from 54.8 to 52.8 between 4Q 2020 and 1Q 2021.

In services sector:

• Brazil Services PMI slipped into a recessionary territory in 1Q 2021, falling from 4Q 2020 reading of 51.4 to 46.1 in 1Q 20201. This marks the lowest reading since 2Q 2020.
• Russia Services PMI rebounded robustly from 4Q 2020 reading of 47.7 to 1Q 2021 reading of 53.6. Russian Services PMIs have been very volatile during the pandemic period, hitting the low of 32.0 in 2Q 2020 and the high of 56.8 in 3Q 2020.
• India Services PMI improved from growth-signaling 53.4 in 4Q 2020 to even faster growth-consistent 54.2 in 1Q 2021. India and Russia were the two BRIC economies posting improvements in services sector in 1Q 2021.
• China Services PMI fell from 'very high growth' signaling reading of 57.0 in 4Q 2020 to moderate growth-signaling 52.6 in 1Q 2021.
• Overall, BRIC Services Sector Activity Index - a measure I calculate based on Markit PMI data inputs - fell from 54.8 in. 4Q 2020 to 52.6 in 1Q 2021, virtually matching the decline in Manufacturing Sector Activity Index over the same period of time. 
• BRIC Services Activity Index also underperformed Global Services PMI which average 53.3 in 1Q 2021. In 4Q 2020, BRIC Services Activity Index was ahead of Global Services PMI (54.8 to 52.3).

9/3/20: BRIC PMIs 1Q 2020: The Test of Covid2019

BRIC PMIs for February 2020 are out and showing massive strains of #COVID2019 on Chinese economy and the twin supply and demand shocks impact on the Global economy:

Starting with Manufacturing:

India is the only BRIC economy that provided strong support to the upside for Global Manufacturing PMI, with India 1Q 2020 Manufacturing PMI reading so far at 54.9, the strongest since 2Q 2012. Brazil Manufacturing PMI was at 51.7 - marking a moderately strong expansion - roughly in line with 51.8 ad 51.9 for 4Q 2019 and 3Q 2019, respectively. In contrast, Russian Manufacturing PMI continued to show contracting sector activity at 48.1, marking the third consecutive quarter of sub-50 readings. Last time Russian Manufacturing reported cautiously positive PMIs was in 1Q 2019.

The real story, however, was Chinese Manufacturing PMI. Thanks to Corona Virus, PMI fell to 45.7 over January-February 2020, with February reading of 40.3 being a complete disaster. The quarterly average is now at it lowest reading since 1Q 2009 when it was at 44.0 and is likely to tank further in March.

Thus, BRIC Manufacturing PMI sat at an abysmal 48.6 reading in 1Q 2020 based on January-February data, the lowest reading since 4Q 2015 and notch below 48.8 reading for Global Manufacturing PMI.

Services PMIs showed the same dynamics as Manufacturing. Again, India led to the upside at 54.9, and Brazil followed at 51.6. Russia remained in solid growth territory, however, in the sector with 1Q 2020 PMI reading at 53.1. China tanked: Chinese services PMI fell to 39.2 in 1Q 2020, dragging the BRIC Services PMI to 45.6 in 1Q 2020, down from 52.3 in 4Q 2019. This is lowest BRIC Services PMI reading on record (note: I use GDP weights to compute BRIC PMIs). Global Services PMI was at 49.9.

Composite PMIs traced the patterns described above for Services and Manufacturing. India Composite PMI was at 57.0 the strongest since 1Q 2011. Brazil Composite PMI was at 51.6, basically unchanged on 4Q 2019 reading of 51.5. Russia Composite Index was at 51.8, down from 4Q 2019 reading of 52.7. China Composite PMI fell to 39.7, its lowest reading on record. Global Composite PMI was at 49.15.

Once again, these readings to-date are impact benchmarks for Corona Virus pandemic shock to the global economy, since the data does not cover the massive spread of contagion from China to other economies which happened in March. The next update, due in early April, should be brutal, as COVID19 bites across the broader global economy.

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.

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.

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.

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

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

On Manufacturing side:

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

Chart below summarises trends in Manufacturing PMIs

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

Services sectors:

As the above illustrates:

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

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

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

3/3/16: 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.

2/3/16: BRIC Manufacturing PMI: February

BRIC manufacturing sector conditions have posted major deterioration in February 2016 compared to January, marking another ugly month for world’s largest emerging economies.

Russian Manufacturing PMI for February posted a rather unsurprising and relatively mild deterioration from already marginally-recessionary reading in January. Details are covered here: http://trueeconomics.blogspot.com/2016/03/2316-russia-manufacturing-pmi-february.html.

Chinese Manufacturing PMI continued to tank in February, with country Manufacturing sector remaining the weakest of all BRICs, save Brazil, every month since July 2015. The details are covered here: http://trueeconomics.blogspot.com/2016/03/2316-china-manufacturing-pmi-february.html.


Meanwhile, Brazil’s manufacturing recession “extended to February, with a further drop in incoming new work leading companies to lower production and cut jobs again. Such was the extent of the downturn that firms shed jobs at the second-fastest pace since April 2009,” per Markit.

Brazil’s Manufacturing PMI fell from an ugly 47.4 in January to a horrific 44.5 in February, marking 13th consecutive sub-50 reading. On a 3mo average basis, Brazil’s Manufacturing remained in a contraction (45.8) over the 3mo period through February 2016, just as it was in the contraction (44.0 average) in the 3mo period through November 2015. In 3mo period through February 2015, PMI averaged 50.2.

Per Markit: “Amid evidence of an increasingly fragile economy and a subsequent fall in demand, the level of new business received by Brazilian manufacturers decreased in February. Having accelerated to the fastest since November 2015, the pace of contraction was steep. As a consequence, companies scaled down output again. Production dipped at a sharp and accelerated rate.
Supported by the depreciating real, new foreign orders for Brazilian manufactured goods improved for the third straight month in February. That said, new business from abroad increased at a modest pace overall.”

All in, Brazil remains BRIC’s weakest economy in Manufacturing sector terms every month since February 2015.


As in previous months, India was the only BRIC economy with Manufacturing PMI reading above 50.0 marker. In February 2016, Indian Manufacturing PMI stood at 51.1, unchanged in January 2016. The positive impact of this, however, is weak, at 51.1 marks relatively low (by historical comparisons) growth in the Indian Manufacturing sector.

Per Markit: “Manufacturing business conditions in India continued to improve, with new orders, exports, output and purchasing activity all rising in February. However, a faster expansion in new business inflows failed to lift growth of output and workforce numbers were left broadly unchanged again. PMI
data also highlighted a weaker rise in costs and the first reduction in selling prices since September 2015… Reflecting sustained growth of new work, Indian manufacturers raised their production volumes in February. That said, the rate of expansion eased since January and was marginal overall.”

On a 3mo MA basis, Indian Manufacturing PMI averaged 50.4 in 3 months through February 2016, down on 50.7 average for the 3mo period through November 2015 and down massively on 52.9 3mo average through February 2015.

Overall, India remains the best performing economy in the BRIC group, even though its Manufacturing sector growth is now in slow growth mode since September 2015.

In summary, in February, BRIC group of world’s largest emerging markets economies has posted another deeply disappointing performance across the Manufacturing sector. This compounds adverse headwinds in these economies in January and signals strong possibility of the BRICs exerting a significant negative pressure on global growth.

2/3/16: China Manufacturing PMI: February

Chinese Manufacturing PMI for February signalled worsening operating conditions in the sector and marked 12th consecutive month of recessionary readings, reaching 48.0 in February, down from 48.4 in January and down from 50.7 in February 2015.

Per Markit: “Operating conditions faced by Chinese goods producers continued to deteriorate in February. Output and total new orders both declined at slightly faster rates than at the start of 2016, which in turn contributed to the quickest reduction in staffing levels since January 2009. Lower production was a key factor leading to the steepest fall in stocks of finished goods in nearly four-and-a-half years during February. At the same time, lower intakes of new work enabled firms to marginally reduce their level of work-in-hand for the first time in ten months. Prices data indicated weaker deflationary pressures, with both selling prices and input costs
declining at modest rates.”

On a 3mo MA basis, 3mo average through February stood at 48.2 - second lowest in the BRICs, up marginally on 48.0 3mo average through November 2015, but down on 50.0 3mo average through February 2015.

It is simply impossible to imagine how this data can be consistent with 6.9 percent growth recorded in 2015 or with over 6% growth being penciled for 1Q 2016.

As shown above, China is now a consistent under-performer in the BRIC group since July 2015 with its Manufacturing PMI reading below that of Russia (in a recession) and above Brazil (in a deep recession).

2/3/16: Russia Manufacturing PMI: February

Russian Manufacturing PMI for February produced another disappointment, falling from a marginally contractionary reading of 49.8 to somewhat faster contraction-signalling 49.3.

Per Markit, “Russian manufacturers reported a further deterioration in operating conditions during February, the third in as many months. Job cuts
were evident amid a sharp fall in backlogs of work. However, production remained broadly unchanged as a slight rise in new orders was reported. Meanwhile, price pressures remained evident, as both output charges and input costs rose.” So firms effectively were reducing their backlogs of orders, with work-in-hand reductions continuing now every month since March 2013.

On a slightly positive note, per Markit: “Russian goods producers recorded a slight expansion in new business volumes during February. According to anecdotal evidence, a higher volume of new work reflected the development of new products. However, the rise in new orders was driven by the domestic market, as new export orders declined further. The rate of contraction accelerated to the sharpest in 19 months and was marked overall.”

On a 3mo MA basis, 3mo average through February 2016 stood at 49.3, which is lower than the 3mo average through November 2015 (49.8), but still better than the 3mo average through February 2015 (48.7).

So the key reading from this data is that Manufacturing remains in a shallow downturn for the third month in a row, signalling a poor start to 2016 and leaving no doubt that the economy is now set to post another quarter of negative growth, unless there is a major improvement in Services sector readings in February and a major gain across both sectors in March.

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.

1/2/16: BRIC Manufacturing PMI January: A Test of Stagnation?

I covered China Manufacturing PMI in an earlier separate note here: http://trueeconomics.blogspot.com/2016/02/31116-china-manufacturing-pmi-its-at.html with core conclusion that Chinese Manufacturing PMIs have been now running second worst in the BRIC’s group since July 2015, staying above only Brazil’s - a country that is in an outright recession. PMI index came in tat 48.4 in January, marginally up on 48.2 in December 2015, marking 11th consecutive month of sub-50 readings. 3mo average through January 2016 is now at 48.4 against 3mo average through October 2015 at 47.6. Current 3mo average is down significantly on 49.8 3mo average through January 2015. Last time Chinese Manufacturing posted statistically significant expansion (as measured by PMI reading above 51.46 - the statistically significant growth marker - was back in July 2014.

India Manufacturing PMI posted a rise to 51.1 in January from 49.1 in December, with January reading being highest in 4 months. This sounds like good news, expect it is not. The reason is that at 51.1, the PMI is well below historical average of 54.5. And it is below January 2015 level of 52.9. 3mo average through January 2016 is at zero growth mark 50.0, which compered poorly to 3mo average through October 2015 at 51.4 and worse relative to 53.6 which is 3mo average through January 2015. Market release was quite upbeat on India numbers, however, noting that “the industry recovered following the contraction seen at the end of last year. Alongside a resumption of output at some firms impacted by December’s flooding, manufacturers also benefited from rising inflows of new business from domestic and export clients.” The sectoral breakdown of the index is also concerning. Again per Markit, “The consumer goods subsector remained the principal growth engine at the start of the year, seeing substantial expansions of both output and new orders. In contrast, producers of investment goods saw output and new orders fall, while production volumes stagnated in the intermediate goods category.”

Russian PMIs were covered in a stand alone post here: http://trueeconomics.blogspot.com/2016/02/1216-russian-manufacturing-pmi-january.html with core conclusion that although Russia retained its's position as the second strongest performing economy by Manufacturing PMIs in the BRIC group in January, the latest reading puts Russian Manufacturing in a stagnation zone too close to 50.0 to call it a full-blown contraction. This has meant that over the last 3 months, Russian Manufacturing PMI averaged 49.7, a reading nominally below 50.0, although an improvement on 49.1 average for 3 months through October 2015, and on 49.4 3-mo average through January 2015. In simple terms, Russian Manufacturing continued to contract in 3 months through January 2016, but the rate of contraction was virtually indistinguishable from zero growth.


This leaves us to cover Brazil Manufacturing PMI. Brazil Manufacturing index posted a rise in January, hitting an 11-mo high of 47.4. By all normal metrics, this is a disaster territory reading, consistent with rather sharp deterioration in trading conditions. But for Brazil - this was an improvement, especially as output and news orders both were contracting at slower rates in January. Per Markit: “The downturn in the Brazilian manufacturing sector continued at the start of 2016, with levels of production and new orders contracting for the twelfth successive month. This continued to filter through to decisions relating to staff hiring, stock holdings and purchasing activity, all of which also declined during the latest survey month.”  On the positive (sort of) side, “output declined at weaker rates in each of the three production categories (consumer, intermediate and investment) covered by the survey. Underlying the latest decrease in output was a further reduction in the level of incoming new orders. The latest drop in inflows of new work received was mainly centred on the domestic market, as the volume of new export business expanded for the second straight month in January.” On a 3mo average basis, 3mo average through January 2016 is at 44.5, which is worse that 3mo average through October 2015 (45.6) and 3mo average through Ja
nuary 2015 (49.9). In simple terms, Brazil remains the basket case of BRIC economies, leading the group to the downside on Manufacturing.

Chart and table below summarise the BRIC’s outlook:

So, overall, BRIC Manufacturing side of the economy is still in a woeful shape. India's return to growth is relatively weak, while contractionary conditions prevail in Brazil (strong, albeit moderating on the end of 2015), Russia (very weak contraction, closer to stagnation) and China (where PMI data has been at serious odds with official national accounts data for some time now). The net result for the global growth is not exactly encouraging.

31/1/16: China Manufacturing PMI: It's at Recession Levels, Folks

China manufacturing PMI signalled another month of deterioration in operating conditions for January 2016. Per Markit, “with both output and employment declining at slightly faster rates than in December. Total new business meanwhile fell at the weakest rate in seven months, and despite a faster decline in new export work.’

Overall, PMI index came in tat 48.4 in January, marginally up on 48.2 in December 2015, marking 11th consecutive month of sub-50 readings. 3mo average through January 2016 is now at 48.4 against 3mo average through October 2015 at 47.6. Current 3mo average is down significantly on 49.8 3mo average through January 2015. Last time Chinese Manufacturing posted statistically significant expansion (as measured by PMI reading above 51.46 - the statistically significant growth marker - was back in July 2014.

Interestingly, Markit is using very ‘diplomatic’ language in their release, saying that “Production at Chinese goods producers fell for the second successive month in January. Though modest, the rate of contraction was the fastest seen in four months. According to panellists, relatively weak market conditions and fewer new orders had led firms to cut production.” In simple terms, this means that the Manufacturing sector in Chine is not growing slower, but is contracting. Which, of course, is vastly inconsistent with official GDP growth data. Over the last 15 months, Chinese Manufacturing managed to hit PMI >50.0 on only one month. One month. How this can be consistent with an economy growing at 6.9 percent is anyone’s guess.

And Chinese companies are now appearing to be deep in revenue recession too. per Markit: “Weaker client demand led manufacturers to discount their prices charged again in January, thereby extending the current sequence of deflation to 18 months (although the rate of reduction was the slowest seen since June 2015). Lower selling prices were supported by a further fall in average input costs at the start of the year.”

In fact, Chinese Manufacturing PMIs have been now running second worst in the BRIC’s group since July 2015, staying above only Brazil’s - a country that is in an outright recession.

I mean you getting any signs of the 6.8-6.9 percent growth anywhere here? No? Well, in general, Services PMIs are also in a tanking mode, but more on this separately.

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.