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).

7/5/20: BRIC Composite PMIs: Global Economy in a Free Fall

With Russia and China data finally in, here are the full updated BRIC PMIs for April (note: manufacturing has been covered in more details here: https://trueeconomics.blogspot.com/2020/05/4520-eurozone-manufacturing-pmis-crater.html).

Sharp drop in Manufacturing PMIs in April, compared to 1Q 2020, were accompanied by even more spectacular declines in Services PMIs:

Across the BRICs, Services PMI fell from 44.9 in 1Q 2020 to 30.6 in April. The two readings represent the lowest and the second lowest readings in quarterly PMIs in history of the series (since 1Q 2006).

Brazil Services PMI sunk from already-contractionary 45.9 in 1Q 2020 to 27.4 in April. Russia saw its Services PMI falling from 47.7 in 1Q 2020 to 12.2 in April, with the swing of -35.5 points in one go. India, however, went into an even worse collapse, with its Services PMI falling from 54.1 to 5.4. Indian economy should be contracting at more than 15.5 percentage points if these numbers are true.

China was a 'relative' out-performer in Services PMIs, with its index increasing from a strongly recessionary 40.4 in 1Q 2020 to 44.4 in April, signalling a moderate reduction in the rate of economic activity contraction.

In comparison, Global Services PMI stood at 24.8 in April, down from 45.5 in 1Q 2020. This means that two of the BRIC economies, Russia and India, are both underperforming Global PMI in the services sector.

As the result of the extreme changes in the Manufacturing and Services PMIs, BRICS composite PMIs have fallen sharply off their 1Q 2020 levels:

Global Composite PMI fell from 45.8 in 1Q 2020 to 26.5 in April, signalling worsening of the global recession. India matched Global Composite PMI reading in April, showing a fall from 46.9 in 1Q 2020 to 26.5 in April. China outperformed the Global Composite, with its Composite PMI rising from 42.0 to 47.6, even though April reading remains recessionary. Russian Composite PMI fell through the floor, declining from the recessionary 47.7 in 1Q 2020 to a depression-level 13.9 in April. India performed even worse, with its Composite PMI falling from growth-supportive 54.8 in 1Q 2020 to an unprecedented 7.2 in April.

Overall, movements in PMIs in March-April 2020 have been extreme. So extreme, I had to re-scale the charts and double-check the numbers, especially in the case of Russia and India.

6/5/20: The Glut of Oil: Strategic Reserves

The Giant Glut of Oil continues (see my analysis of oil markets fundamentals here: https://trueeconomics.blogspot.com/2020/04/23420-what-oil-price-dynamics-signal.html)

China strategic oil reserves have also surged. U.S. oil reserves are now nearing total capacity of 630 million barrels, and China's reserves are estimated to be about 90% of the total capacity of 550 million barrels. Japan's reserves similar (capacity of ca 500 million barrels). Australia is using leased U.S. strategic reserves capacity to pump its own stockpiles, with its domestic storage capacity already full. 

6/5/20: 1Q 2020 US GDP:

From Factset: "The decrease in first-quarter real GDP was largely driven by the 7.6% decline in consumer spending, which subtracted 5.3% from the total GDP number. Investment was also a drag on growth, while an improvement in the trade deficit partially offset these negatives. We may see downward revisions to these numbers with the next two data revisions, and second-quarter growth is expected to be far worse. Analysts surveyed by FactSet are currently expecting a 29.9% contraction in Q2."

Yeeks!

23/4/20: What Oil Price Dynamics Signal About Future Growth

My column at The Currency this week covers the fundamentals of oil prices and what these tell us about the markets expectations for economic recovery: https://www.thecurrency.news/articles/15674/supply-demand-and-the-dilemma-of-trade-what-the-collapse-in-oil-prices-tells-you-about-post-covid-10-economy.

Key takeaways:

• "...current futures market pricing is suggesting that traders and investors expect much slower recovery from the Covid-19 pandemic than the V-shaped one forecast by the analysts’ consensus and the like of the IMF and the World Bank. 
• "As a second order effect, oil markets appear to be pricing post-Covid-19 economic environment more in line with below historical trends global growth, similar to that evident in the economic slowdown of 2018-2019, rather than a substantial expansion on foot of the sharp Covid- shock."

2/4/20: COVID19 in three charts

#COVID2019 economy in three pics:

U.S. unemployment claims, week 2 of filings:

Irish unemployment claims, first month of filings:

 World GDP forecast after one month of Covid pandemic:

FUGLY! All around. 

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.

7/1/20: Tax cuts, trade and growth: The Trumponomics Effect

My article on U.S. economy and the implied risks to investors for Manning Financial and Cathedral:
https://cfc.ie/2019/12/10/tax-cuts-trade-and-growth-the-trumponomics-effect/.

#USEconomy #Economics #Markets #USgrowth #GlobalGrowth #GlobalEconomy #SecularStagnation @cathedrlfinance @sheehymanning 

16/10/19: Euromoney Risk Survey Q3 2019 Results

Euromoney analysis of Q3 2019 results for country risk surveys and risk outlook forward, with lots of comments from myself and others: https://www.euromoney.com/article/b1hjf7xr90tdkj/ecr-survey-results-q3-2019-us-china-canada-mexico-punished-by-tariffs.

16/10/19: Ireland and the Global Trade Wars

My first column for The Currency covering "Ireland, global trade wars and economic growth: Why Ireland’s economic future needs to be re-imagined": https://www.thecurrency.news/articles/1151/ireland-global-trade-wars-and-economic-growth-why-irelands-economic-future-needs-to-be-re-imagined.

Synopsis: “Trade conflicts sweeping across the globe today are making these types of narrower bilateral agreements the new reality for our producers and policymakers.”

7/7/19: 2Q 2019 BRIC PMIs: The Bad, The Ugly, and The Uglier Still

BRIC PMIs for June are out and with them we have 2Q 2019 figures. And the story they tell is two-fold:

• Fold 1: There is an ongoing Global-scale slowdown in the economy that is broad, sharp and testing the waters of a mild recession approaching
• Fold 2: The BRICs are barely providing any upside support to the Global momentum.

Take Manufacturing:

This is simply the 'Uglier' side of the ugly. Global Manufacturing PMI hit 49.8 in 2Q 2019 - statistically, zero growth level, nominally - a manufacturing recession ward, albeit a very shallow one. More ominously, we now 6 consecutive quarters into declining growth reading. Now, per BRICS: Brazil at 50.9 (holding somewhat just above the water line, but down from 53.0 in 1Q 2019); Russia is at 50.1 - basically zero growth and down from 51.3 in 1Q 2019; India is at 52.2, down from 53.6 in 1Q 2019, and China is at 49.9, having delivered four quarters of statistically zero growth readings. So BRIC GDP shares-weighted Manufacturing PMI is at 50.6, which means the overall Manufacturing sector is barely staying afloat on the choppy growth seas. In 1Q 2019 the same was 51.0 and the 2q 2019 reading is at the lowest level since 3Q 2016.

Services sector posted Global PMI at 52.1. Which sounds like 'growth, but is hardly impressive. 2Q 2019 was the weakest since 4Q 2016, and marks the fourth quarter of shrinking PMI readings.

BRICs: Why, they are barely staying above the Global trend. Brazil is in a statistical Services recession at 48.6 in 2Q 2019, the worst reading in 3 consecutive quarters; Russia posted Services PMI of 51.4 in 2Q 2019 - seemingly respectable, but the lowest reading since 4Q 2015; China Services PMI is at 53.1, basically unchanged on 53.0 in 1Q 2019 (about the only 'british' spot); and India is at 50.3, the lowest for any quarter since 1Q 2018.

All of which means that the Composite activity index reading is a bit of debacle:

Overall, Global Composite PMI fell to 51.5 in 1Q 2019, the lowest reading since 2Q 2016. Dynamics are also bad: Global Composite PMI has now declined every quarter since its local peak of 54.2 in 1Q 2018. And the BRICs are in the same boat: Brazil Composite is at 49.3, the lowest reading in 3 quarters; Russia Composite at 51.2, the lowest in 13 quarters; India Composite at 51.4 is the slowest growth signal in seven quarters; and China is at 51.4 for the lowest reading in 8 quarters.

Not a pretty sight... 

14/5/19: Monetary Policy at the edge of QE

My new column for the Cayman Financial Review on the current twists in global Monetary Policies is now available on line: https://www.caymanfinancialreview.com/2019/05/07/monetary-policy-at-the-edge-of-qe/.

14/5/19: Trump's Trade Wars and Global Growth Slowdown Put Pressure on Corporate Earnings

The combined impacts of rising dollar strength, reduced growth momentum in the global economy and President Trump's trade wars are driving down earnings growth across S&P500 companies with double-digit drop in earnings of companies with more global (>50% of sales outside the U.S.) as opposed to domestic (<50 exposures.="" of="" p="" sales="" the="" u.s.="" within="">
Per Factset data, released May 13, "The blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings decline for the S&P 500 for Q1 2019 is -0.5%. For companies that generate more than 50% of sales inside the U.S., the blended earnings growth rate is 6.2%. For companies that generate less than 50% of sales inside the U.S., the blended earnings decline is -12.8%."

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

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

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

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

6/4/19: BRIC Services Lead, Manufacturing Lag Global Growth Momentum

I have blogged recently on BRIC and global PMIs for manufacturing and services, covering the data for 1Q 2019, as well as monthly PMIs for BRIC economies. Here are the 1Q 2019 PMIs for composite economic activity across the same:

In 1Q 2019, only Brazil posted improving Composite PMI reading, with the rest of BRIC economies showing deteriorating growth conditions, in line with continued drop in Global Composite PMI. Over the last 5 quarters, Global Composite PMI has dropped from its peak of 54.23 in 1Q 2018 to 52.5 in 1Q 2019, with current reading at its lowest in 10 quarters.

Of all BRIC economies, India and Russia are outperforming the Global Composite PMI, with Russia posting the fastest growth at 54.1 of all BRIC economies in 1Q 2019. Brazil is statistically in line with Global Composite PMI, while China is a clear under-performer.

Sectorally, the main weakness amongst the BRICs is in Manufacturing, with Services outperforming Global Composite index:

4/4/19: BRIC Services PMIs for 1Q 2019: Converging to Global Growth Momentum

Q1 2019 Services PMIs for BRIC economies came in signaling no change on 4Q 2018 and converging to the Global Services PMI reading.

Brazil Services PMI averaged 52.3 in 1Q 2019, a gain on 51.2 in 4Q 2018, and the highest quarterly reading since 1Q 2013 when it stood at exactly the same reading. 

Russia Services PMI average for 1Q 2019 was at 54.9, down from 55.6 in 4Q 2018, singling moderating, but still fast pace of growth in the Services sectors of the economy. 

China Services PMI was at 53.0 in 1Q 2019, a marginal improvement on 52.8 reading in 4Q 2018, but still substantially down on 53.7 reading in 1Q 2018.

India Services PMI was at 52.2- a slip on 53.0 recorded in 4Q 2018. Given past weakness in Services sector in the Indian economy, 52.2 reading is still respectably tied to the second fastest growth for any quarter since 4Q 2016.

GDP-weighted BRIC Services PMI averaged 53.0 in 1Q 2019, the same reading as in 4Q 2018 and singling marginally faster growth than 52.7 reading for 1Q 2018.

Meanwhile, Global Services PMI averaged 53.2 in 1Q 2019, down marginally on 53.4 in 4Q 2018 and marking the third consecutive quarter of declining growth in global services economy. 

CHART

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

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

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

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

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

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

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

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

CHART

4/4/19: BRIC PMIs for March Show Improved Growth Conditions

With March PMIs reported by Markit in, here are the monthly frequency trends for the BRIC economies activity, based on composite PMIs:

Overall BRIC activity as signalled by PMIs remains range-bound in the tight, low activity range over the last 6 years (second chart above). However, the composite activity is running close to the upper bound of the range, implying overall stronger performance in the recent month. This is confirmed by the first chart above, showing that both Russia and ex-Russia BRIC economies activity is accelerating on trend since July 2018.

More analysis, based on smoother quarterly data forthcoming, so stay tuned.