7/1/20: BRIC Composite PMIs 4Q 2019

Composite Global economic activity, as measured by Composite PMI has slowed down markedly in 2019 compared to 2018. In 2018, average Composite Global PMI (using quarterly averages) stood at 53.6. This fell back to 51.7 in 2019. In 4Q 2019, average Global Composite activity index stood at 51.3, virtually unchanged on 51.4 in 3Q 2019. Overall, Global Composite PMI has now declined in 7 consecutive quarters. 

This weakness in the Global economic activity is traceable also to BRIC economies.

Brazil’s Composite PMI has fallen from 52.0 in 3Q 2019 to 51.5 in 4Q 2019. Things did improve, however, on the annual average basis, 2018 Composite PMI was at 49.6, and in 2019 the same index averaged 51.4. 

Russia Composite PMI has moved up markedly in 4Q 2019, thanks to booming reading for Services PMI. Russia Composite index rose to 52.7 in 4Q 2019 from 51.0 in 3Q 2019. reaching its highest level in 3 quarters. However, even this robust reading was not enough to move the annual average for 2019 (52.3) to the levels seen in 2018 (54.1). In other words, overall economic activity, as signaled by PMIs, has been slowing in 2019 compared to 2018.

China Composite PMI stood at 52.6 in 4Q 2019, up on 51.5 in 3Q 2019, rising to the highest level in 7 consecutive quarters. However, 2019 average reading was only 51.7 compared to 2018 reading of 52.2, indicating that a pick up in the Chinese economy growth indicators in 4Q 2019 was contrasted by weaker growth over 2019 overall. 

India Composite PMI remained statistically unchanged in 3Q 2019 (52.1) and 4Q 2019 (52.0). On the annual average basis, 2018 reading of 52.5 was marginally higher than 2019 reading o 52.2. 

In 4Q 2019, all BRIC economies have outperformed Global Composite PMI indicator, although Brazil was basically only a notch above the Global Composite PMI average. In 2019 as a whole, China, Russia and India all outperformed Global Composite index activity, with Brazil trailing behind.

9/10/18: BRIC Composite PMIs 3Q 2018: A Tale of Growth Slowdown

Previous posts on 3Q 2018 PMIs have covered:

1. BRIC Manufacturing PMIs: http://trueeconomics.blogspot.com/2018/10/31018-global-pmis-tanked-in-3q-2018.html;
2. BRIC Services PMIs: http://trueeconomics.blogspot.com/2018/10/91018-bric-services-pmis-3q-2018-slower.html; and
3. Global Composite PMIs: http://trueeconomics.blogspot.com/2018/10/31018-global-pmis-tanked-in-3q-2018.html.

Now, let’s take a look at the BRIC Composite PMIs that combine Services and Manufacturing sectors growth signals. As Global Composite PMI signalled slowing growth momentum in the global economy, BRIC Composite PMIs all trailed global growth indicator.

Brazil Composite PMI fell deeper into contraction territory in 3Q 2018 (48.5) compared to 2Q 2018 (49.1), marking the fourth consecutive quarter of contraction in the economy, as signalled by the combination of PMI indices in Services and Manufacturing sectors. 3Q 2018 was the lowest Composite PMI reading for the South America’s largest economy in 6 consecutive quarters.

Russia Composite PMI slipped from 53.4 in 2Q 2018 to 52.4 in 3Q 2018, marking slowdown in the rate of economic expansion. This was the lowest reading in Russia Composite PMIs since 2Q 2016. Despite this, Russia Composite PMI was the second largest in the BRIC group (marginally below India’s 52.5 reading).

China Composite PMI posted a modest decline in the growth rate falling from 52.5 in 2Q 2018 to 52.1 in 3Q 2018, the latter reading marking the lowest rate of expansion in 3 quarters. In fact, China Composite PMIs have been singling weak growth dynamics in every quarter since 4Q 2016 - something that is yet to be reflected in the official growth figures for the country.

India Composite PMI bucked the BRIC trend and rose from 51.9 in 2Q 2018 to 52.5 in 3Q 2018, for the first statistically significant growth signal in 5 quarters. Despite this, growth momentum in India remains below global PMI levels.

Global Composite PMI declined from 54.0 in 2Q 2018 to 53.3 in 3Q 2018.

Overall, slowing global growth momentum is being matched by a slowdown in the BRIC economies. Both Manufacturing and Services sectors of the BRIC economies are underperforming their Global counterparts and the overall trend is toward declining global and BRIC growth.

9/10/17: BRIC Composite PMI 3Q: Failing Global Growth Momentum

Two posts above cover Manufacturing PMIs and Services PMIs for 3Q 2017 for BRIC economies. The following updates Composite PMIs performance.

Global Composite PMI came in at 53.7 in 3Q 2017, matching exactly 1Q and 2Q 2017 readings and basically in line with 53.6 reading in 4Q 2016. In other words, Global Composite activity PMI index has been showing relatively robust growth across the two key sectors for the last 4 quarters running. 

In contrast to Global indicator, BRIC economies posted relatively underwhelming performance with exception of Russia.

• Brazil Composite PMI index stood at 50.0 (zero growth) in 3Q 2017, which is a marginal gain on 49.8 in 2Q 2017. This marks the first time since 1Q 2014 that Brazil Composite indicator reached above the outright contraction levels, but it is a disappointing reading nonetheless. For one, one quarter does not signal stabilisation in Latin America’s largest economy. Worse, Brazil’s economy has been performing poorly since as far back as 2H 2011. It will take Brazil’s Composite index to hit above 52 mark for 2-3 consecutive quarters to start showing pre-2011 levels of activity again.
• Russia Composite PMI, on the other hand, remains the bright spark in the BRIC’s dark growth universe. Although falling to 4 quarters low of 54.1 in 3Q 2017, the index remains in strong growth territory. 3Q 2017 marked 6th consecutive quarter of robust post-recession recovery, consistent with 2.5-3 percent growth in GDP, quite ahead of the consensus forecasts from the start of 2017. The last quarter also marks the sixth consecutive quarter of Russian Composite PMIs running above Global Composite PMIs. This means that for the last 18 months, Russia has been the only positive contributor to Global growth from amongst the ranks of the BRIC economies.
• China Composite PMI firmed up in 3Q 2017, rising to 51.9 from 51.3 in 2Q 2017. 3Q 2017 reading was, however, the second weakest in the last four quarters and suggests relative weakness in the growth environment. 
• India composite PMI fell below 50.0 mark in 3Q 2017, reaching 48.7 - a level signifying statistically significant contraction in the economy for the first time since 4Q 2013. The robust recovery in 2Q 2017 put India Composite PMI at 52.2, but this now appears to be a blip on the radar which shows anaemic growth in 4Q 2016 and 1Q 2017.

As chart above clearly shows, the growth dynamics as indicated by the Composite PMIs have been weak in the BRIC economies over the last 4 consecutive quarters. This is highly disappointing, considering that 4Q 2016 held a promise of more robust expansion. Russian growth conditions have now outperformed Global growth dynamics in every quarter since 2Q 2016, although the latest reading for PMIs suggests that this momentum has weekend in 3Q 2017. In fact, Russian data is quite surprising overall, showing growth conditions largely in line with pre-2009 levels since 4Q 2016. This is yet to be matched by the GDP figures, suggesting that something might be amiss in the PMI data. 

Finally, the chart above shows sectoral dynamics for BRIC group of economies in terms of PMI indices. Both Services and Manufacturing PMIs for BRIC grouping are now running close to or below statistical significance levels for positive growth. More importantly, on-trend, current performance remains within the bounds of growth consistent with H2 2013-present trend: shallow, close to statistically insignificant expansion, that is distinct from robust growth in pre-2008-2009 period and the short period of post 2009 recovery.

Thus, PMI data still indicates that BRIC economies currently no longer act as the key drivers of global growth.

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

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


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

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

Composite PMIs as follows:

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

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

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

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

Chart below illustrates trends in quarterly Composite PMIs

Key take aways:

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

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

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

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

11/9/16: BRIC PMIs: Composite Activity - August

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

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

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

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

Couple of charts to illustrate the trends:

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

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

3/3/16: BRIC Composite Activity - February

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

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

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

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

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


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

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

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


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

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

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

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

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

5/10/15: Russia Services & Composite PMI: September 2015

Having covered Russian Manufacturing PMIs earlier here. Now, let’s take a look at the Services PMI and Composite PMI next.

In a positive sign of some stabilisation in the economy in September, Services PMI came in at moderate growth reading of 51.3 - the highest reading since July 2015 and up on 49.1 in August.

According to Markit, there was an increase in new orders, although excess capacity persisted in September. Job cuts continued as well, on foot of reductions in backlog of work.

September reading signals fourth instance of growth over the last 6 months, which, in the past did not translate in de-acceleration in the rate of economic contraction, so the latest figure should be considered with caution when interpreting growth in the Services sector as a sign of economic stabilisation. We need several months of continued above 50 readings on both Manufacturing and Services PMIs side to call an economic turnaround.

That said, given we are still awaiting for release of other BRIC data for Service, Russian Services sector performance in September is encouraging. China’s Services PMI came in at 50.5, below Russian PMI last month. The latest data for other BRIC economies shows Russia likely moving from third position in sector growth in August to second in September.

Boosted by Services improvement, Composite PMI for Russia posted a reading over 50 in September, coming in at 50.9 compared to 49.3 in August. This beats China’s 48 reading for September.

Note: I use 100 scale as opposed to market 50 scale.

As chart above shows, Russian Composite PMI has been on an upward trend since February 2015 trough and is now in growth territory over three months for the last 6 months period. Again, this warrants only cautious optimism, however, as we are yet to have consecutive above 100 readings in the index.

The key point is that we need to see both manufacturing and services PMIs reading above 50 to call normalisation in the economy. Last time we had such a reading was in September 2014, right before the full-blown currency crisis erupted to derail fragile stabilisation in the economy. 

4/7/15: Russia Services and Manufacturing PMIs: June 2015

Manufacturing: 

• "Operating conditions in Russia’s manufacturing sector continued to deteriorate modestly during June as output, new orders and employment all fell."
• "Price levels continued to rise, albeit at historically muted rates, while shortages of working capital and input inventories meant firms continued to meet their orders directly from stock wherever possible."
• Manufacturing PMI posted 48.7 in June, still in contracting mode, but a slight improvement on 47.6 in May. 
• June marked 7th consecutive month of Manufacturing PMIs below 50.0
• 3mo average through June was 48.4 against 3mo average through March at 48.5 and 3mo average through June 2014 at 48.8. In other words, the rate of contraction remained broadly the same in 3mo through June 2015 as in previous 3mo period.

Services:

• Slight fall in service sector business activity during June as activity declined in spite of ongoing growth in new work
• Extra capacity signalled in service sector as backlogs and employment both continue to fall
• Service providers retain some optimism of pickup in activity in coming year
• "Activity levels in Russia’s service sector were down marginally in June as ongoing growth in new business proved insufficiently strong relative to capacity levels. …Capacity was cut in response through to another marked fall in staffing levels."
• Services PMI fell to 49.5 in June from 52.8 in May, reversing two months of above 50.0 readings in April-May.
• 3mo MA through June 2015 was 51.0 against 3mo average through March 2015 at 43.8 - a marked improvement for the 2Q 2015. 3mo average through June 2014 was 47.6, which means that 2Q 2015 saw, on average, positive, but weak growth against sharp contraction in 1Q 2015 and moderate contraction in 2Q 2014.

Composite:

• Markit Russia Composite PMI Index recorded a level of 49.5 in June, down from 51.6 in May and a three-month low. 
• Composite PMI 3mo average through June 2015 was 50.6, well ahead of 45.7 average through 1Q 1015 and 48.3 average for 2Q 2014. Again, in quarterly terms, 2Q 2015 was stronger, signalling growth, compared to contractionary dynamics in 2Q 2014 and 1Q 2015.

Note: most recent trend (downward shift in overall activity across all two sectors) set in around October 2012 and run through February 2015. Since February 2015, we are seeing some improvements in the series, but no new trend, yet.

3/6/15: Russian Services & Composite PMIs: May

Having covered Russian Manufacturing PMI earlier (here), now lets update data for Services PMI and Composite PMI.

In contrast to disappointing Manufacturing PMI, Services PMI for Russia came in at a surprising strong upside, rising to 52.8 in May 2015 from 50.7 in April. This marks the highest reading since December 2013 and the second consecutive month of above 50.0 readings in the series. 3mo average through May 2015 is now at 49.9 as opposed to 3mo average through February 2015 at 43.7 and 3mo average through May 2014 at 46.9.

Composite PMI, pushed up by Services sector reading posted another surprising rise to 51.6 in May, signalling rather solid growth momentum, compared to 50.8 in April 2015. 3mo average for the series is at 49.7 against 3mo average through February 2015 at 45.8 and 3mo average through May 2014 at 47.5.

As chart above illustrates, we now have strong growth in Services sectors driving up overall Composite indicator. This is quite surprising, given April real dynamics (see here).

Overall, PMIs indicate a volatile, trend-less movement toward overall economic stabilisation that require two things to confirm a positive trend: 1) improvement in Manufacturing reading over the next 2-3 months and 2) continued above-50 readings in Services over another 2-3 months. In simple terms, it is too early to call a positive trend in the economy, but Services dynamics are encouraging.

7/5/15: Russian Services and Composite PMIs: April 2015

Russian Services and Composite PMIs are out today (Markit) and the results are quite positive.

Remember that Manufacturing PMI for April posted 48.9 compared to 48.1 in March, signalling less pronounced rate of contraction in the sector. Analysis of this is available here: http://trueeconomics.blogspot.ie/2015/05/5515-bric-manufacturing-pmi-further.html

Per Markit release: "The new orders component of the [Manufacturing] PMI was the primary drag on the headline index in April. Total new work fell at the sharpest pace for nearly six years, although the contraction was principally centred on capital goods producers… In contrast, consumer goods companies recorded solid growth… New export orders continued to fall markedly, extending the current period of contraction to twenty months. That said, some manufacturers found that clients were undertaking a degree of import substitution and choosing to purchase where possible from Russian producers rather than those based abroad. …However, there were signs from the latest survey that these …impacts were dissipating."

So key points for Manufacturing were:

• Production rises modestly, but new orders down at a sharper rate
• Price indices fall sharply to signal much slower inflation
• Focus on cost-rationalisation and higher productivity leads to modest job losses

Meanwhile, in Services sectors, per Markit, "seasonally adjusted HSBC Russia Services Business Activity Index… signalled a return to growth in April. The reading of 50.7 (up from 46.1) pointed to a marginal increase in activity at service providers, representing a marked turnaround from the substantial reductions seen in the early part of 2015. …Services companies mainly linked the improvement in activity to higher new orders. New business also returned to growth in April, ending a seven-month sequence of contraction. According to respondents, rising client demand had helped them to secure more new business during the month. …Meanwhile, services companies continued to lower their staffing levels in April, extending the current sequence of job shedding to 14 months. Although remaining solid, the rate of decline in employment eased for the second month in a row and was the slowest since October 2014."

Key points on Services PMI:

• Russian private sector output returns to growth
• Services new business increases
• Further reductions in staffing levels

Overall, m/m, seasonally-adjusted PMIs posted a first monthly rise in Manufacturing sector and second consecutive monthly rise in Services sector. Rate of growth in Services PMIs (m/m) has been extremely robust in March and April.

This resulted in the seasonally adjusted Composite Output Index posting 50.8 in April, up from 46.8 in the previous month and above the 50.0 no-change mark for the first time in seven months. This marks second consecutive month of m/m growth in Composite PMI.

More on near-term dynamics of the indices in the following post that will cover BRIC economies PMIs. But overall, we have some encouraging signs of stabilisation in the economy. The signs are still fragile and manifested through moderating rate of contraction signalled in Manufacturing and a marginal rate of growth in Services, with both manifesting over only one month to-date. In other words, we will need much more positive data to confirm any potentially developing upside trend.

6/11/2014: Russia PMIs: Signalling a Poor Start to Q4

Russia's PMI indices out for October 2014 signal further deterioration in growth conditions at the start of Q4.

• Manufacturing PMI barely remained above 50.0 line posting a reading of 50.3 in October, down from the already statistically insignificant 50.4 in September. 3mo MA is now at 50.6, still better than 3mo MA through July (49.7) and 3mo MA through October 2013 (50.2), but all of this is down August reading (51.0). The index is trending well below historical average of 51.8. As a reminder, Manufacturing sector has been posting weak PMIs since around March 2013, with sub-50 readings from November 2013 through June 2014.
• Services PMI fell sharply in October to 47.4 (signalling a sharp contraction) from 50.5 in September. 3mo MA through October is now at 49.4, which signals slower decline in output in the sector than 3mo MA through July (48.5), and stands contrasted by the robust expansion in 3mo through October 2013 (51.9). The index is well below the historical average of 55.7.
• Composite PMI has fallen below 50.0 line for the first time after 4 consecutive monthly readings above 50.0. October reading is at 49.1, down from 50.9 in September. 3mo MA is at 50.4 against previous 3mo MA at 49.5 and 52.0 a year ago.

Chart below illustrates:

As sanctions against banks and corporates bite, Russian companies are aggressively deleveraging out of foreign-listed and intermediated debt. This is cutting back investment and lending activities across both Manufacturing and Services sides of the economy. The October figures are not reflective of the aggressive hikes in interest rates passed through by the Central Bank of Russia (+1.5% to 9%), so we can expect even further deterioration in activity in November. It now appears that, as expected, Q4 2014 will post negative growth in the economy.

3/10/2014: Russian Services & Composite PMIs: September 2014

Russia Services and Composite PMIs were released today by Markit/HSBC for September.

I covered relatively poor performance of the Manufacturing PMI here: http://trueeconomics.blogspot.ie/2014/10/1102014-russian-manufacturing-pmi.html and comparatives between BRICs for Manufacturing were discussed here: http://trueeconomics.blogspot.ie/2014/10/2102014-bric-manufacturing-pmis-things.html

On Services PMI side:

• September PMI came in at 50.5 which is basically unchanged on 50.3 in August and signals weak growth (statistically, this reading is not significantly different from 50.0).
• 3mo MA is now at 50.2 (barely above 50.0) although that is an improvement on Q2 2014 reading of 47.6, yet poorer than Q3 2013 reading of 50.7.

On Composite PMI side:

• Composite PMI declined marginally from 51.1 in August to 50.9 in September, still staying ahead of 50.0. Both readings were, however, statistically not significantly different from 50.0, implying weak expansion in output.
• Q3 average is at 51.1, which is a lot better than 48.3 average for Q2 2014 and is ahead of 50.4 average in Q3 2013.

Chart below shows three PMIs together and identifies October-November 2012 are the period of trend shift toward falling PMIs.

Overall, activity remains subdued across all sectors of the Russian economy and growth signals from PMIs suggest that this year growth is likely to be in the range of around 0.4-0.5%.

Comparatives with BRICs are coming up later today, so stay tuned.

3/9/2014: Russian Services & Composite PMIs: August 2014

Having covered Markit/HSBC PMI for Manufacturing for Russia here: http://trueeconomics.blogspot.ie/2014/09/192014-russia-manufacturing-pmi-august.html lets now update data for Services PMI and Composite PMI.

Services side of the economy posted a month of very anaemic growth, registering 50.3 in August after the contraction of 49.7 in July. On the surface, August reading break 5 month streak of PMIs below 50.0, but in reality, 50.3 is weak. So weak, it is statistically indistinguishable from 50.0 as was 49.7 before it and 49.8 in June.

3mo average through August is now at 49.9 - making the above point on weakness. This stands above 3mo average through May which was 46.9. As a reminder, weaknesses in Russian services sectors began well before all the geopolitical mess in the Ukraine set on. Hence, 3mo average through August 2013 was 49.8. Services sectors did bounce back in 2013 in August as they did this time around, but the bounce back is weaker in 2014 than in 2013. The recovery accelerated somewhat through December 2013 and then slumped from January on. It remains to be seen if September heralds some revival in the sector fortunes.

Historical average for the series at 55.8, so we are way below where the average growth is supposed to be, which is, adjusting for structural issues and dynamics is probably around 52-53 mark.

With weaknesses in services and only marginally better manufacturing reading, Composite PMI still under performed in August. August Composite PMI fell slightly to 51.1 from 51.3 in July. Nonetheless, the indicator stayed above 50.0 line for the third consecutive month in a row. 3mo average through August is at 50.8, up on 3mo average through May which was at 47.5. As with Services, 3mo average currently is above 3mo average through same period of 2013 (50.0), but the increase y/y is relatively weak.

Again, the same pattern found in the Services sector trends repeats in the Composite indicator:

• Overall economic weaknesses in the Russian economy were manifesting themselves back in June 2013 through September 2013, with Composite PMI running only slightly ahead of 50.0 mark. 
• Acceleration in growth in October-December gave way to an outright contraction from January on. It is worth noting that the first sight of sanctions against Russia appears around mid-March 2014 by which time the economy has been posting Composite 2mo average PMI readings below 50.0 for 3 months. 
• Sanctions acceleration in May coincided with lowest point in Composite PMI reading, although the low was statistically indistinguishable from all other contractionary readings, save for January. 
• Since May sanctions (round 2) through August (covering also sanctions round 3 in July), Composite PMI managed to return to growth territory. 

The main points, summarised in the chart below are:

1. Russian economy is still running well below capacity
2. Return of PMIs to growth is fragile and weak - this is the first month of all three metrics reading above 50.0 since October 2013
3. We need at least 2 more months of readings above 50 for all three metrics to call a reversal of the downward trend into an upward, and
4. We need to see PMI reading around 52-53 fort Services and Manufacturing to spot any improvement in surplus capacity.

5/8/2014: Russia: Manufacturing, Services & Composite PMIs: July 2014

Russia Services and Composite PMIs are out for July (released by Markit and HSBC). Here are the top-level numbers:

• Recall that Manufacturing PMI cam in at 51.0 in July, up on 49.1 in June and 49.2 in July 2013. This marks the first month of above 50.0 reading. Manufacturing went below 50.0 mark in July 2013, so this means we had 11 months of contracting output from July 2013 through June 2014 and one month of expansion at 51.8 back in October 2013. This is evidence of a structural slowdown in the economy, compounded by the Ukrainian crisis, although the effects of the crisis are not the only explanatory factor here.
• Services PMI came in at 49.7 - marginally below 50.0 and slightly lower than 49.8 reading in June 2014. In July 2013 the index stood at 48.7. All in, we now have 5 consecutive months of readings below 50.0 with marked slowdown in growth starting around July 2013 and accelerating from March 2014 through June 2014. 3mo MA is now at 48.5 which is nearly identical to 48.4 3mo MA through April 2014. 3mo MA for 3 months through July 2013 was at 49.6. Again, structural slowdown is evident in the series and again, the slowdown is being exacerbated by the Ukrainian crisis.
• Composite PMI came in at 51.3, marking second consecutive month of above 50.0 readings (although June reading of 50.1 was extremely weak). 3mo MA through July 2014 is at 49.5 and 3mo MA through April 2014 was 48.5, while 3mo MA through July 2013 was at 49.9. Exactly the same story as with the above sectoral indices: manifestation of a slowdown in July 2013, followed by continued weakness through February 2014 and deepening in slowdown from March 2014 through May-June 2014.

Chart to illustrate:

All PMIs remain in 'troubled waters' per trend - it will take at least 3 months to reestablish any upward trend and there is significant risk that fragile July improvements can be reversed in months ahead. The Ukrainian crisis is now starting to bite - gradually ramping up downward pressure on the economy.

2/7/2014: Russia Services & Composite PMI: June 2014

Russia Services PMI (Markit & HSBC) is out today for June 2014, posting a reading of 49.8 - virtually indistinguishable from zero growth. 3moMA is now at 47.6 against previous 3moMA at 49.6. In April-June 2013, 3mo MA was 51.1.

June marked the fourth consecutive month of Services PMI below 50.0 and the index has been posting slowdown in the economy since October 2012, with first negative growth signals coming through in Summer 2013.

With improved manufacturing reading (see earlier post here), the Composite PMI for the Russian economy strengthened to 50.1 in June from 47.1 in May. May 2014 marked the lowest reading in the index since May 2009, so not surprisingly, activity showed a slight bounce back. At current levels, however, the economy is not showing signs of recovery.

3mo MA as of June is at 48.3 and 3mo MA for the previous 3 months is at 49.2. Both contrast against the 3mo MA through June 2013 at 51.2/

Again, the slowdown in activity is marked from October 2012.