5/4/21: BRIC's Manufacturing PMIs: 1Q 2021

 

Given a lot of noise about economic re-opening and abatement of the late 2020 wave of the pandemic, we expected BRIC countries PMIs to improve significantly in 1Q 2021 compared to 4Q 2020. Alas, the opposite took place:

• Brazil Manufacturing PMI fell from 64.1 in 4Q 2020 to 55.9 in 1Q 2021. All three months of 1Q 2021 came in sub-60 (all three months of 4Q 2020 were above 60) and March 2021 was the lowest monthly reading since June 2020.
• Russia Manufacturing PMI slipped from 51.5 in February to 51.1 in March. On quarterly basis, Russia Manufacturing PMI actually managed to rise from a recessionary reading of 47.6 in 4Q 2020 to a weak recovery reading of 51.2 in 1Q 2021. This is the highest reading since 1Q 2019 and the first above-50 reading since the end of 2Q 2019. Russia was the only BRIC economy posting increasing PMI in Manufacturing sector in 1Q 2021, and at that, the improvement went to anaemic growth from pretty steep contraction.
• China Manufacturing PMI disappointed, falling from 53.8 in 4Q 2020 to 51.0 in 1Q 2021. Given structural importance of Chinese manufacturing globally, this implies a further build up in orders backlogs in the global supply chains, signaling more inflationary pressures down the line. On a monthly basis, March 2021 posted fourth consecutive decline in monthly PMIs, with March reading of just 50.6 - statistically, basically indistinguishable from zero growth conditions in the sector.
• India Manufacturing PMI fell from 57.7 and 57.5 in January and February 2021 to 55.4 in March 2021, marking the slowest monthly rate of growth since August 2020. On a quarterly basis, India Manufacturing PMI fell from a hard-to-believe rate of expansion of 57.2 in 4Q 2020 to still robust growth of 56.9 in 1Q 2021.

Brazil and India were the two BRIC economies that managed to outperform global manufacturing sector growth in 1Q 2021 which came in at 54.1, up on 53.5 in 4Q 2020.

Global GDP-weighted BRIC group Index of Manufacturing Activity that I calculate based on Markit data fell from from 54.8 in 4Q 2020 to 52.8 in 1Q 2021, reaching the lowest reading since 2Q 2020 when it was at 45.0. Whilst BRIC group Index of Manufacturing Activity outperformed Global Manufacturing PMI in every quarter between 1Q 2019 and 4Q 2020, it fell below the global measure in 1Q 2021.

4/1/21: BRIC: Manufacturing PMIs 4Q 2020

Latest data for BRIC Manufacturing PMIs indicates three countries outperforming global rate of recovery in manufacturing sector, against one country (Russia) remaining in contraction territory and well below global growth mark.

On a quarterly basis,

• Brazil's Manufacturing PMI stood at 64.1 in 4Q 2020, up on 62.6 in 3Q 2020, marking the second highest and the highest reading on record. The contraction in 2Q 2020 (with PMI at 42.0) was sharp, but not as sharp as in 1Q 2009. By these comparatives, GFC-related contraction of 2008-2009 resulted in 4 quarters average reading of 45.1 and saw three consecutive sub-50 readings. The Covid-19 related contraction was stretched only across one quarter, with 4 quarters average of 54.8 in 2020. It is, genuinely, hard to reconcile these numbers with reality of the Covid-19 crisis.
• Russia Manufacturing PMI slipped to 47.6 in 4Q 2020 from 49.5 in 3Q 2020, marking sixth consecutive quarter of sub-50 readings. Statistically, Russian Manufacturing posted no growth (> 50 readings) in seven consecutive quarters. Over 2020 as a whole, Russian PMIs averaged abysmal 46.0, compared to the GFC and the Great Recession average of 2008-2009 of 44.7.
• India Manufacturing PMI was at 57.2 in 4Q 2020, up on 51.6 in 3Q 2020, and averaging 49.5 for the year as a whole. During the GFC and the Great Recession period, India's PMI averaged at 51.1. Unlike Brazil, India is yet to recover to pre-Covid-19 levels of activity.
• China Manufacturing PMI finished 2020 with a reading of 53.9, averaging 51.1 over 2020 as a whole, with overall PMIs performance suggesting that Chinese industrial producers have recovered from the Covid-19 pandemic by the end of 2020. China's Covid-19 experience has been more benign than the country contraction during the GFC and the Great Recession (46.9 average).

Global Manufacturing PMI stood at 53.5 in 4Q 2020 and an average of 49.3 over 2020 as a whole, against BRIC's Manufacturing Index (weighted by relative global GDP shares of the four economies) at 54.9 in 4Q 2020 and 50.5 for 2020 as a whole. In other words, BRICs have supported global growth to the upside during the Covid-19 pandemic. 

3/11/20: BRIC: Manufacturing PMIs October

 BRIC's manufacturing PMIs are out for October, marking the start of Q4 2020. Overall, the results reinforce Q3 2020 trends highlighted here: https://trueeconomics.blogspot.com/2020/10/141020-bric-manufacturing-pmis-q3.html. 

• Brazil posted further acceleration in the recovery momentum with Manufacturing PMI rising to 66.7 from 3Q 2020 62.6. 3Q 2020 was the historical record quarter for Brazil's Manufacturing PMI readings. Brazil's Manufacturing PMIs have now strengthened every month since May 2020, the last month of sub-50 readings.
• In contrast to Brazil, Russia Manufacturing PMI slipped again in October, hitting a 5-months low at 46.9, down from 48.9 in September and well below already poor 49.5 reading for 3Q 2020. Prior to 4Q 2020, Russia clocked five consecutive quarters of Manufacturing PMIs below 50.0 mark.
• China Manufacturing PMI rose from 53.0 in 3Q 2020 to 53.6 in October. China's latest reading is on-trend, with rising PMIs for the third quarter in a row. 
• India Manufacturing PMI stood at 51.6 in 3Q 2020 and this improved to 58.9 in October, marking a major acceleration in growth conditions. 
• Three of the BRIC economies have posted October Manufacturing PMI readings more robust than Global PMI reading of 53.0. Thus, overall BRIC Manufacturing activity index stood at 55.2 in October, well ahead of 53.0 reading for 3Q 2020. The last time BRIC Manufacturing activity index was below that of the Global Manufacturing PMI was 4Q 2018.
• Russia was the only BRIC economy to continue posting recessionary PMI reading in its manufacturing sector. 

14/10/20: BRIC: Manufacturing PMIs Q3 results

 

BRIC - Brazil, Russia, India and China - economies have posted a significant improvement in Q3 Purchasing Managers Indices in Manufacturing sector:

Brazil Manufacturing PMI rose to 62.6 - the highest on record in 3Q 2020 following 42.0 recessionary reading in 2Q 2020. This is a massive rebound from pandemic lows, and the level of 3Q reading puts into question validity or accuracy of the surveys. On a monthly basis, the index was at 64.7 and 64.9 in August and September. Brazil's manufacturing index was at sub-50 readings in March-May 2020, with a reasonably credible rebound in June and July. August and September readings are literally out of the ball park, both in terms of historical comparatives and in terms of past turning points from recessions to expansions. 

Russia Manufacturing PMI treaded water in 3Q 2020, swinging from 48.4 in July to 51.1 in August and back to 48.9 in September. As the result, Russia posted sub-50 reading for 3Q 2020 at 49.5, the only BRIC economy in this position. This marks 5th consecutive quarter of sub-50 PMIs. Statistically,  the last time Russian manufacturing was in the expansion territory was in 1Q 2019. 

India Manufacturing PMI rose strongly in Q3 2020 to 51.6, well above 35.1 recession trough in Q2 2020. However, statistically, current reading signals relatively weak recovery. September monthly index came in at more robust 56.8, suggesting that the economy may be gathering some momentum and recovery may be accelerating. 

China Manufacturing PMI was basically unchanged at 53.0 in September compared with 53.1 in August. 3Q 2020 PMI is at 53.0, which is an improvement on statistically zero growth reading of 50.4 in 2Q 2020. China's Manufacturing PMI numbers are historically less volatile, so 53.0 marks the fastest pace of expansion since 4Q 2010.

Overall, GDP-weighted BRIC Manufacturing Activity Index stood at 53.0 in 3Q 2020, above the Global Manufacturing Index (51.6) and up on 45.0 in 2Q 2020.

3/10/20: BRIC: Manufacturing PMIs Q3 2020

 

Based on July-September data, here are the main takeaways from the BRIC Manufacturing Sector PMIs for 3Q 2020:

• Brazil Manufacturing PMIs gained serious speed in 3Q 2020 compared to 2Q 2020, rising from a recessionary reading of 42.0 in April-June to signal rapid recovery at 62.6 over the last three months through September. This marks the highest quarterly reading on record for the country Manufacturing sector. Dynamically, growth accelerated in every month since the start of the sector recovery in June 2020.
• Russia Manufacturing PMI came in at a disappointing and contractionary 49.5 in 3Q 2020, marking the fifth consecutive quarter of sub-50 readings, although still an improvement on the pandemic period low of 39.0 set in 2Q 2020. Adding pressure to the already poor performance, monthly PMI reading slumped from a relatively weak recovery signalled by PMI at 51.1 in August to a recessionary reading of 48.9 in September. 
• India Manufacturing PMI rose from 52.0 in August to 56.8 in September, with 3Q 2020 reading at 51.6 - a substantial but likely incomplete recovery on the pandemic low of 35.1 set in 2Q 2020.
• China Manufacturing PMI rose from 2Q 2020 reading of 50.4 to 3Q 2020 reading of 53.0, implying almost a full recovery in the manufacturing sector on 1Q 2020 pandemic period trough of 47.2. September marked a fifth consecutive month of PMI readings above 50.0. 

Overall, BRIC weighted Manufacturing Activity Index (based on monthly PMIs) stood at 53.0 in 3Q 2020, up on 45.0 in 2Q 2020 and 49.1 in 1Q 2020. Current reading signals the fastest q/q growth in the sector since 1Q 2011. The ongoing recovery across the BRIC economies is faster than Global Manufacturing PMI recovery (at 51.6), albeit highly uneven and somewhat suspicious. The core driver for this growth is Brazil, where manufacturing data dynamics is completely out of touch with services data dynamics and looks extremely unreliable. 

8/9/20: BRIC: Manufacturing PMIs

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

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

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

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

Stay tuned for BRIC Services PMIs and Composite PMIs next.

1/3/19: U.S. PMI is not at a Crisis levels

My take on today's ISM for Manufacturing data here: https://twitter.com/GTCost/status/1101512164584546304, with charts:

Chill-ax everyone… #ISM is not even close to signalling a serious trouble ahead… Not that it is a measure I would even consider for troubleshooting.

— Constantin Gurdgiev (@GTCost) March 1, 2019

8/5/18: BRICS DECK: Part 2: PMIs, Investment and Inflation

In a recent post (http://trueeconomics.blogspot.com/2018/05/3518-brics-deck-2018-imf-updates.html) I have provided top level analysis of growth dynamics in the BRICS economies based on the IMF WEO April 2018 update. Here is the section of my BRICS deck with updated view on PMIs, Aggregate Investment and Inflation:

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.

3/2/17: Global Composite PMI signals improving growth in January

Over the last four months, I have been suggesting that markets participants pay close attention to Global PMIs, and in particular to the emerging signals of firming global economic growth. January 2017 figures did not disappoint on this front.

I covered Manufacturing PMI yesterday in a post available here.

Today, we got the reading for Services and Composite data. Both printed 53.9, which marks statistically significant expansion and a rise on 4Q 2016 figures, suggesting that global growth is still accelerating. Crucially, new orders are continuing to rise as well.

Per Markit: “The J.P.Morgan Global All-Industry Output Index… posted 53.9 in January, its best reading since March 2015 and up from 53.6 in December. The index has now signalled expansion for 52 consecutive months.”

One caveat is that China data is not included in both Manufacturing and Services PMI readings. But, As shown here: China Manufacturing PMI posted lacklustre performance in January, barely staying above 50.0 level.

Again, quitting Markit, “growth of global service sector business activity improved to a 17-month high in January, offsetting a minor easing in the rate of expansion of manufacturing production.”

Geographically, “the acceleration in the rate of increase in all-industry output was led by the US and Russia. US growth was the sharpest since November 2015, while Russia registered its quickest expansion of economic activity for over eight-and-a-half years. The euro area saw output growth steady at December’s 67-month record, while rates of increase slowed in Japan and the UK. India and Brazil both saw all-industry activity decline at the start of 2017.”

“Global employment rose again in January, with the pace of job creation matching December’s 19-month record.” Again, geographically, employment “…increased in the US, the eurozone, Japan, the UK, Russia and India, but fell further in Brazil.”

Crucially for monetary policy forward, inflation ticked up as well.

Overall, Global Manufacturing PMI remained at rather robust levels of 52.7 in January 2017, comparable to those attained at the end of 4Q 2016 and well above the 51.4 average for the last 4 years. Global Services PMI ended January 2017 at 53.9, which is above already robust 53.5 recorded in 4Q 2016 and above the 4-year average of 53.4. At 53.9, Global Composite PMI is slightly ahead of 4Q 2016 levels (53.6) and is well above 53.0 average for the last 5 years. Thus, across both sectors, the global economic expansion appears to be improving to the upside at the start of 1Q 2017.

Analysis of BRIC Services and Composite PMIs coming up as soon as we have China data.

2/2/17: Global Manufacturing PMI Continues to Signal Potential Growth Recovery in January

Market published Global Manufacturing PMI (Purchasing Managers Index) for January, showing that growth conditions in global manufacturing at the start of 2017 have matched those prevailing in December 2016, with both months posting a PMI reading of 52.7, which is:

1. Statistically above 50.0 (signalling statistically significant expansion in the sector);
2. Statistically above 51.4 - the long run average; and
3. Current reading ties December 2016 reading for a 34-month high and 51st consecutive month of above 50.0 readings.

Some important details from Markit release are:

• “The improvement in business conditions was led by the investment goods sector, where the PMI rose to its highest level in over five-and-a-half years.” This suggests that the globally depressed capex cycle might be turning to the upside, finally, after years of subdued capita investment by companies;
• “The improvement at consumer goods producers was slightly better than that seen in December, while growth in the intermediate goods category lost some momentum.” This suggests that current outlook is for improved short run consumer demand, but a moderation in previous expectations about future growth in demand might be afoot. 
• Growth was concentrated in the US, the euro area and the UK, but slowed in Japan. South Korea, Brazil, Turkey and Greece were “the only nations to register contractions.”
• “…the rate of growth in new business intakes accelerated to a two-and-a-half year high. Part of the increase in demand reflected stronger international trade flows, as new export orders rose at the quickest pace since September 2014.” This fed into “a further increase in outstanding business during January. Backlogs of work expanded for the eighth consecutive month, with growth registered across the consumer, intermediate and investment goods categories.” This is consistent with my view - expressed earlier - that going forward, expectations of future growth in final demand might be moderating.

Additionally, “the latest release sees the launch of a new index tracking business sentiment – the Future Output Index – that is based on a question asking companies if they expect output to be higher, the same or lower in 12 months’ time. The start of 2017 saw positive sentiment climb to a 19- month high, with improvements seen in the US, the euro area, Japan, the UK, India, Brazil and Russia.” I would not hold my breath for the robustness of this indicator for quite some time, as we need to see more historical data building up to assess just what exactly does it tell us about the sector activity.

As the chart above clearly shows, we are only inching toward late-2009-mid 2011 levels of activity, although we have now breached 2015-mid-2016 doldrums trend.

Overall, the data is a welcome news for the global growth, but we will have to wait and see for China and Indonesia Manufacturing PMIs to come out to see more robust picture of what is happening in global trade and manufacturing trends. We also need to see if the current levels of growth can be successfully breached to the upside in February-March. January is, overall, a challenging month to base one’s assessment for broader 1Q economic performance signals due to shorter range of working days and lags from December feeding into January numbers.

2/2/15: Irish Manufacturing PMI: January 2015

Markit/Investec Irish Manufacturing PMI is out for January, posting 55.1, down on 56.9 in December and the lowest reading in any month since May 2014. Still, 55.1 is a strong performance.

3mo MA is now at 56.1 which is slightly worse than 56.5 3mo reading through October 2014, but is ahead of 55.7 average for 12 months through January 2015.

The growth rate is slowing down, but the activity remains robust:

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

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

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

Table summarising Manufacturing PMI for October-November:

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

6/11/2014: BRIC PMIs: Heading for a Recession...

BRIC PMIs are out for October, signalling sharp drop-off in economic activity across the EMs. Here is the updated data:

Manufacturing:

• Brazil Manufacturing PMIs slipped deeper into contraction territory for the second consecutive month, dropping from 49.3 in September to 49.1 in October. 3mo average is now at 49.5 compared to 3mo average through July at 49.0. Year on year, 3mo average is down 0.7 points.
• Russia Manufacturing PMI slipped from 50.4 in September to 50.3 in October, also signalling a slowdown in growth, but not an outright contraction as in the case of Brazil.
• China Manufacturing PMI improved to 50.4 in October from 50.2 in September. 3mo average through October is now at 50.3, up slightly on 50.0 on 3mo period through July 2014 and almost unchanged on year ago (50.4).
• India Manufacturing PMI improved from 51.0 in September to 51.6 in October, with 3mo average through October at 51.7, slightly below 51.8 3mo average through July. Year on year 3mo average through October is up very strongly 2.4 points (from 49.2 in August-October 2013).

Overall, Manufacturing activity across BRICs remains highly subdued with India being the only country posting a weak, but positive trend from Q2 2013 on.

Services:

• Brazil Services PMIs fell sharply into contraction territory, from 51.2 in September to 48.2 in October. 3mo average is now at 49.5 compared to 3mo average through July at 50.6. Year on year, 3mo average is down 1.4 points. This means both sides of Brazil's economy are now in contraction, first time this happened since August 2013.
• Russia Services PMI contracted sharply from 50.5 in September to 47.4 in October, also posting an outright contraction as in the case of Brazil. 3mo MA is now at 49.4 which is a shallower contraction signal than 48.1 3mo average through July. A year ago, 3mo average was running at 51.9.
• China Services PMI posted a slowdown in growth to 52.9 in October from 53.5 in September. 3mo average through October is now at 53.5, up on 51.3 for the 3mo period through July 2014 and higher than 52.6 reading a year ago.
• India Services PMI deteriorated from 51.6 in September to 50.0 in October, with 3mo average through October at 50.7, below 51.3 3mo average through July. Year on year 3mo average through October is up very strongly (from 46.4 in August-October 2013).

Overall: Services activity deteriorated in all BRIC economies, while Manufacturing performance deteriorated in two economies and improved in 2 other.

Summary of both PMIs changes is here:

Using a simple total of two PMIs, we can trace overall trends in the BRIC economies (without weighting these by lagged services v manufacturing shares). The dynamics are striking:

Overall economic conditions across the BRIC economies deteriorated in October compared to September, with Russia leading with a sharp downturn. Downward trend in the BRIC economies has now been in place since January 2013, with Russian economy leading in this dynamic from October 2012.

Note: you can read more detailed analysis of Russian PMIs here: http://trueeconomics.blogspot.ie/2014/11/6112014-russia-pmis-signalling-poor.html

5/11/2014: Ireland Manufacturing & Services PMIs: October 2014

With Ireland's Services and Manufacturing PMIs out for October, it is time to update the data set.  As usual, let us start with headline figures:

• Services PMI reading fell slightly to 61.5 in October from 62.5 in September. 3mo average through October is now at 62.1 which is slightly ahead of 3mo average through July 2014 (61.9). Year on year, 3mo average through October is up 2.6%.
• All of the above a comfortably 'growth signals' for Services sectors.
• Manufacturing PMI strengthened from 55.7 in September to 56.6 in October. 3mo average through October is now 1t 56.5 which is up on 55.2 for the 3mo average through July 2014 and is up 3.3% y/y.
• All of the above suggest strong expansion in Manufacturing, contributing to overall economic growth.

Chart below shows deviations in both indices from 50.0 (so positive readings signal economic activity expansion in the sector). 

Next, consider October readings y/y and on 2012 across both sectors:

The above clearly shows that over the last 12-15 months Irish economy has experienced positive contributions to overall economic growth from both sectors: Services and Manufacturing, with the rates of growth now significantly in excess of historical averages and being led more by Manufacturing than Services ('Current" reading is firmly above the trend line). This can be a positive signal when it comes to employment expectations, assuming growth is concentrated more in the sectors relatively free from rampant tax optimisation by the MNCs (aka outside pharma).

3/10/2014: Ireland: Quarterly PMIs and Composite Activity Index: Q3 2014

As promised in the previous post, covering monthly Services PMI (http://trueeconomics.blogspot.ie/2014/10/3102014-services-pmi-for-ireland.html), here is my analysis of quarterly data and my own Composite Activity Index across manufacturing and services sectors, as well as construction sector.

All data reported is based on my calculations using Markit/Investec PMIs.

In Q3 2014, Manufacturing PMI averaged 56.1 which is up on 55.5 average for Q2 2014 and is up on Q3 2013 average of 51.9. Q3 2014 marks the 5th consecutive quarter of expansion in the series.

Services PMI stood at 62.1 in Q3 2014, unchanged from 62.1 in Q2 2014 and up on 58.7 Q3 2013 reading. This quarter marked 15th consecutive quarter of above 50 readings in PMI.

Construction PMI (data through August so far only) is at 62 in Q3 2014, up on 61.2 in Q2 2014 and 51.0 in Q3 2013. This marks 5th consecutive quarter of expansion in the sector.

Composite Activity Index is now at 60.35 in Q3 2014 ex-Construction, up on 60.16 in Q2 2014 and on 59.95 in Q3 2013. This is 18th consecutive quarter of composite indicator above 50.0. Including construction, Composite Activity Index is at 60.38, up on Q2 2014 reading of 60.18 and up on Q3 2013 reading of 56.81.

Chart to illustrate:

On a note of caution: showing just how weak the PMI indices are in predicting Irish growth, here are two charts plotting log changes in PMIs against log changes in GDP and GNP. In all cases, explanatory power of changes in PMIs is weak when it comes to matching the outcomes in growth in the real economy. The same qualitative results hold for levels of PMIs against log changes in GDP and GNP and to levels of PMIs against actual GDP and GNP levels.

2/10/2014: BRIC Manufacturing PMIs: Things are getting slower...

Yesterday, I covered Manufacturing PMIs for Russia (http://trueeconomics.blogspot.ie/2014/10/1102014-russian-manufacturing-pmi.html) so today time to update all BRICs chart:

And from the above, things that were ugly in the merging markets continue to be ugly and get worse.

In September, according to Markit (and all its marketing partners paying for the releases of its data):

• Manufacturing PMIs posted rather significant slowdown in growth in Russia: from 51.0 in July and August to 50.4 in September. However, on a 3mo MA basis, the index is performing better: 3mo average through September (Q3 average) stood at 50.8 (anaemic, but growth) compared to 3mo average through June (Q2 average) of 48.7 and 3mo average through September 2013 of 49.3. M/M slowdown in growth was 0.6 points, which is the second best performance in the BRIC group and September level of index signals second fastest growth in BRIC group.
• In China, Manufacturing PMI posted zero change in September (50.2) on August (52.4). 3mo average through Q3 2014 was 50.7, which is better than 3mo average for Q2 2014 (49.1) and 3mo average for Q3 2013 (49.3). With zero change in growth in PMI m/m, China is the best performer in the group, but its level of PMI is only third best.
• India Manufacturing PMI posted the largest drop in PMIs in September (51.0) on August (52.4) in the group. 3mo average through Q3 2014 was 52.1, which is better than 3mo average for Q2 2014 (51.4) and 3mo average for Q3 2013 (49.4). With PMI falling 1.4 points m/m, India is the worst performer in the group in terms of m/m dynamics, but its level of PMI is still the highest in the group, which is not surprising, given there appears to be a strong upward bias in India PMI readings across data history (see chart).
• Brazil Manufacturing PMI fell from 50.2 in August to 49.3 in September, switching from growth to contraction - the only country posting contractionary PMI reading in the group. Q3 2014 average reading is at 49.5 which is almost identical to the Q2 2014 reading of 49.4 and to Q3 2013 reading of 49.3. M/m Brazil posted the second worst level of decline in PMI and level-wise it is the worst performer in the group.

Notably, there appears to be little level difference across China and Russia in Q3 2013 Manufacturing activity, despite the fact that Russia is under sanctions pressure relating to Ukraine crisis. Both China and Russia outperformed Brazil, but under-performed India in this sector. Adjusting for Indian data apparent bias upwards, there is also little difference between India and China and Russia.

Summary table of changes and levels:

1/9/2014: BRIC Manufacturing PMIs: August 2014

With Brazil PMIs for Manufacturing sector finally in, time to update chart for BRIC Manufacturing PMI (data by Markit):

The above shows several interesting things:

1. Overall BRICs performance (Manufacturing data so far) is a mixed bag: Brazil and China barely above 50.0, signalling very slow growth (if any, as these readings are not statistically distinguishable from 50.0). Meanwhile, Russia showing relatively weak, but growth, while India showing rather modest growth.
2. Brazil posted its first above 50.0 reading after four consecutive months of below 50 readings. But the 'recovery' rate is very weak. Brazil's 3mo average through August is 49.3, which is lower than 3mo average through May 2014 (49.8) and basically unchanged on 3mo average through August 2013 (49.4). All suggests that things are still 'recessionary' in the manufacturing sector in the country.
3. Russia, despite sanctions already in place, posted second fastest growth amongst the BRIC countries in August and third fastest in July. Current 3mo average is 50.4, which better than 3mo average through May 2014 (48.6) and slightly better than 3mo average through August 2013 (50.1). Last two months saw readings above 50.0, breaking the cycle of 8 months of consecutive readings below 50.0. If anything, manufacturing data suggests stronger performance in the wake of sanctions than prior to them. The rot in the sector set on in the case of Russia back in July 2013, well before any troubles in Ukraine started. First round of sanctions saw PMIs falling from 48.5 to 48.3 - minor impact. Second round of sanctions saw PMIs rise from 48.5 to 48.9, while third round of sanctions saw PMIs staying flat at 51.0. 
4. India continued the trend of growing PMIs in August, with 3mo average now at 52.3, up on 3mo average through May (51.6) and up on recessionary 3mo average of 49.6 back in 3 months period through August 2013. All in, this marks the tenth consecutive month of PMIs above 50 for India, with all but one of these months recording PMIs above 51.3.
5. China posted 5 consecutive months of PMIs reading below 50 in January-May 2014. This negative momentum was reversed in June-August with the current 3mo average standing at 50.9, 3mo average though May 2014 at 48.5 and 3mo average through August 2013 at 48.6.

One more point on Russian PMIs dynamics: the switch in trend from below 50 to above 50 took place in July and involved a PMI swing of 1.9 points - the sharpest recovery for all BRIC manufacturing sectors during the last round of recoveries. Despite this, we only have two months of data above 50.0 and it will require at least 2-3 months more to determine if the Russian manufacturing is moving back onto sustainable growth path or if the current improvements are temporary.

2/7/2014: Irish PMIs Q2 2014: Services, Manufacturing, Construction & Composite Index

In two previous posts I covered Services PMI (here) and Manufacturing PMI (here) for Ireland for June 2014.  June data provides us also with Q2 average levels of activity as measured by PMIs, so let's cover this here.

Q2 2014 Manufacturing PMI averages came in at 55.5, marking the fourth consecutive quarter of readings above 50.0. Q1 2014 Manufacturing PMI averaged at 53.7. Q2 2014 average is now the highest of any quarter since Q1 2011.

All of this indicates that Industry contribution ex-Construction to the GDP should posting growth over H1 2014. And this is good news.

Services Q2 2014 PMI came in at 62.1 - rapid pace of growth - up on 59.9 in Q1 2014 and significantly up on 54.3 in Q2 2013. Again, these are strong indicators of growth in the sector in H1 2014 

And this growth accelerated in Q2 compared to Q1: in Q1 2014 y/y expansion in Services PMI was 10.4% and in Q2 2014 it rose to 14.4%, also in Q1 2014 Manufacturing PMI rose 7.2% y/y and in Q2 this rate of growth was 12.4%.

Finally, Construction PMI (we have these with one month lag, so Q2 figures are based on April-May averages, firmed up substantially, reading 61.9 in Q2 2014 compared to 57.6 in Q1 2014 and 42.4 in Q2 2013. Year on year rates of growth a massive: 28.8% in Q1 2014 and 45.8% in Q2 2014.

All in, the data for Q1 appears to be in line with growth registered in QNA realised today (more of this later) and Q2 is encouraging in so far as it shows acceleration in growth on Q1.

3/1/2013: BRIC PMIs signal nasty end to 2013

Via Markit Economics:

The above shows the problem with the BRIC grouping: general lack of growth momentum, albeit driven by two different sets of forces.

For Brazil and Russia: domestic economic expansions are starting to fizzle out as debt (Brazil), public spending (Brazil) and consumer spending (Russia) are no longer capable of sustaining previous rates of growth. For India and China, growth is also a challenge, but here core drivers are lack of consumer demand growth in advanced economies (China), too much debt and late stage development of assets bubble (China), reduced capacity for services exports growth (India) and dysfunctional domestic markets (China and India). Note that India's relative outperformance in the group comes on foot of longer and deeper contraction in more recent past.

This is uglier than the Euro area effects when it comes to global growth. Core point is: who will be driving growth around the world in 2014?.. Unless the above momentum is reversed, the answer to that question is: no one in particular...