3/8/15: Russia Manufacturing PMI: July 2015

Russia Manufacturing PMI posted slight acceleration in downward momentum in July compared to June.

Per Markit release:

• Operating conditions deterioration was "reflective of soft demand which undermined production and new order intakes. Jobs continued to be lost, while firms reduced their inventories at a marked and accelerated pace."
• Profit margins were continuing to fall under pressure: "On the price front, competitive pressures and lower demand encouraged firms to cut their charges marginally during July. That was in spite of a marked and accelerated increase in input costs."
• July data, however, shows that "the rate of decline was fractional and remained centred on the investment goods sector as consumer and intermediate goods both recorded growth of production compared to the previous survey period."
• Forward looking indicators: "Similar trends were seen for new orders, with a fall in orders for investment goods leading to a decline at the aggregate level. …Levels of new business from abroad also continued to decline during July, with the rate of contraction accelerating since the previous survey period to the sharpest recorded since April."

In numbers terms:

• Manufacturing PMI is now down at 48.3 compared to 48.7 in June 2015 and 51.0 in July 2014. 
• 3mo average through July is at low 48.2 against 3mo average through April at 48.9 and against 49.7 3mo average through July 2014.
• Russian Manufacturing PMIs have been below 50.0 mark for 8 consecutive months now.

Overall, the picture is consistent with two key trends that have developed over recent months:

1. Manufacturing sector is not showing signs of stabilisation that are present elsewhere in the economy; and
2. Within the broad sector, imports substitution is presenting some upside opportunities in consumer goods and intermediate goods, while investment-driven capital goods are showing sharp contractions.

9/7/15: BRIC Composite PMIs: June 2015 & 2Q 2015

In the previous post covering Manufacturing & Services PMIs for BRIC economies, I promised to provide a separate summary of composite PMI-signalled activity.

Here is the summary of both Services and Manufacturing PMIs moves in June:

On a simple cumulative basis (unweighted by sector weights, not to be confused with Markit's Composite PMI):

• Brazil composite activity stood at 86.4 in June, down from 88.4 in May. 2Q 2015 average was 88.5 against 98.4 for 1Q 2015 and down from 99.7 for 2Q 2014. In short - we have ongoing and worsening slowdown in activity across both sectors combined, with the fourth consecutive month of the combined reading below expansion line (100).
• Russia composite activity stood at 98.2 in June, down from 100.4 in May. 2Q 2015 average was 99.4 - an improvement on 92.2 for 1Q 2015 and better than 96.4 recorded for 2Q 2014. The ongoing slowdown is moderating, with activity across both sectors combined showing slower rates of contraction in 2Q 2015. That said, combined activity has been posting contractionary signals in 8 out the last 9 months.
• India composite activity fell to 99.0 in June, posting the first month of sub-100 reading since April 2014, down from 102.2 in May. 2Q 2015 average was 101.6 against 105.4 for 1Q 2015 and down from 102.4 for 2Q 2014. This implies that Indian economic activity growth was posting a significant slowdown q/q and y/y in 2Q 2015.
• China composite activity stood at 101.2 in June, down from 102.7 in May. 2Q 2015 average was 101.9 virtually unchanged against 102.0 for 1Q 2015 and up slightly on 101.1 for 2Q 2014.  China's economy was the only economy in the BRIC group that remained above the 100 line in June.

Charts below illustrate the latest trends:

In summary, things are getting worse, progressively across the BRIC economies, with Russia, surprisingly, presenting an upside momentum to the overall group growth dynamics. That said, the trends are yet to be fully established for Russia. Overall, BRICs have now running along the negative growth trend for some time and BRIC combined (weighted by each economy share of total group GDP) momentum is at 99.0 in June, marking the first sub-100 reading since May 2014. 3mo average through 2Q 2015 is at 100.3, down on 1Q 2015 average of 101.4 and down on 2Q 2014 average of 100.8.

9/7/15: BRIC Manufacturing & Services PMIs: June 2015 & 2Q 2015

With BRICS summit on its way, an updated post on BRIC PMIs (data from Markit):

Brazil:

Manufacturing PMI stood at 46.5 in June, singling sharp rate of contraction that was somewhat slower than the decline in May (45.9). Per Markit, "new orders and output both drop at sharp rates; inflationary pressures ease." June PMI was the highest in four months and marks the fifth consecutive month of sub-50 readings. 3mo average is now at 46.1 against 3mo average through March at 48.8 and 3mo average through June 2014 at 48.9.

Services PMI also came in at disappointing levels, falling to an abysmally low 39.9 in June from already low 42.5 in May. This marks the lowest reading in Services PMI since March 2009 and the second lowest reading in Services PMI in history.

As noted by Markit, "Private sector jobs cut at quickest pace for over six years; Steep, but slower, contraction in new orders received by private sector firms."

With 4th consecutive month of sub-50 readings, services PMI averaged 42.3 in 3mo period through June 2015, compared to 49.5 average for the 3mo period through March 2015 and 50.8 for the 3mo average through June 2014.

Overall, "Brazil’s private sector economy registered its sharpest retreat since March 2009. Down from 42.9 in May to 41.0 in June, the Composite Output Index was indicative of a steep drop in activity, with sharp falls seen at both service providers and manufacturers."

Russia:

Russian PMIs are covered in detail here: http://trueeconomics.blogspot.com/2015/07/4715-russia-services-and-manufacturing.html?spref=tw and summarised below in the table.

India:

India's Manufacturing PMI came in at 51.3, signalling weak-to-moderate expansion of manufacturing output and down from 53.5 in May. On a 3mo average basis, June 2015 PMI was at 51.7 - marginally slower than 3mo average of 52.1 for the period January-March 2015 and slightly ahead of 51.4 3mo average registered through June 2014. Markit noted that June figures presented the "slowest rise in new work since September 2014; Negligible increases in input costs and output charges."

On Services PMI side, June reading of 47.7 marks second consecutive month of sub-50 readings and a sharpening in the downturn from 49.6 in May 2015. 3mo average through June 2015 is now at 49.9 against 3mo average through March 2015 of 53.1 and 3mo average through June 2014 at 51.0. Services PMI is now sitting at the lowest level since March 2014.

Per Markit: "Falling to 49.2, from 51.2 In May, the seasonally adjusted Nikkei India Composite PMI Output Index recorded below the crucial 50.0 threshold for the first time since April 2014. Reductions in activity were centred at service providers, as manufacturing production rose during the month."

China:

HSBC Purchasing Managers’ Index for manufacturing posted at 49.4 in June. This was the fourth successive, marginally up on 49.2 in May. This marks 4th consecutive month of Chinese manufacturing PMI readings below 50. Per Markit release, "Output contracts at slower pace as new orders show signs of revival" but "Staff numbers are cut at sharpest rate since February 2009." 3mo average through June 2015 was 49.2 down from 3mo average for 1Q 2015 AT 50.0 and lower than 49.4 3mo average through 2Q 2014.

On services side, PMI posted a significant "moderation in the rate of service sector activity growth. Moreover, it was the slowest expansion in services business activity since January, as signalled by the HSBC China Services Business Activity Index posting 51.8, down from May’s eight-month high of 53.5." However, 3mo average for services was at 52.7 in June 2015, compared to 52.0 in 3mo period through March 2015 and 51.7 for the 3mo average through June 2014.

"HSBC China Composite PMI™ data (which covers both manufacturing and services) pointed to a further rise in total business activity in China during June. However, the rate of expansion eased to a marginal pace that was the slowest recorded since May 2014. This was signalled by the HSBC Composite Index posting only slightly above the neutral 50.0 mark at 50.6 in June, down from 51.2 in May."

CHARTS

As shown in the charts above, growth conditions remain negative in 3 out of 4 BRIC economies in Manufacturing and Services. No single BRIC economy is posting broad cross-sectoral growth in June and on quarterly averages basis, 

• Brazil is running negative growth signals in both Services and Manufacturing;
• Russia and China are running negative growth in both Manufacturing;
• India is running negative growth in Services.

This contrasts with 1Q 2015 when Brazil and Russia were posting negative growth across both Services and Manufacturing, while India and China were posting positive growth across both sectors.

Things are getting tougher in the BRICs...

Stay tuned for composite analysis and summary next.

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: BRIC Services & Composite PMIs: May 2015

Time to tally up BRICs PMIs for May.

Manufacturing numbers were covered here: http://trueeconomics.blogspot.ie/2015/06/2615-bric-manufacturing-pmi-continued.html

On services side:

• Brazil Services PMI tanked spectacularly, falling from already strongly contractionary 44.6 in April to a 74-months low of 42.5 in May. 3mo average through May is now at an abysmal 45.0 against 3mo average through February at 49.9 and 3mo average through May 2014 of 50.7. All in, this is the third consecutive month of sub-50 readings and adjusting for statistical significance, Services PMI index rose above 50.0 only three times over the last 16 months. 
• Russia Services PMI, meanwhile, surprised to the upside, rising from 50.7 in April (signalling weak growth) to 52.8 in May, signalling pretty robust recovery. 3mo average through May, however, is poor at 49.9, albeit an improvement against 3mo average through February at 43.7 and 3mo average through May 2014 of 46.9. All in, this is the second consecutive month of above-50 readings and first month of readings statically significantly above 50.0. May reading is the strongest since December 2013.
• China Services PMI continued to signal expansion in the sector at an accelerating rate, as the index increased from 52.9 in April to 53.5 in May. 3mo average through May is now at a relatively strong 52.9 against 3mo average through February at 52.4 and 3mo average through May 2014 of 51.3.
• India Services PMI tanked in May, falling from 52.4 in April to a 13-months low of 49.6 in May. 3mo average through May is now at 51.7 against 3mo average through February at 52.5 and 3mo average through May 2014 of 48.8. This development suggests substantial weakening in growth conditions in India which was the bright spot for growth within the BRICs group.

As the charts below shows, on a composite side, Russia has now reversed - for the second month running - previous trend and is now acting as a positive growth contributor to BRICs aggregates. The rest of BRICs, however, are acting as a drag on growth, especially when it comes to Brazil.

Table below summarises recent changes in the PMIs for both components across all BRICs:

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: BRIC Services & Composite PMIs: April 2015

In previous post I covered BRIC Manufacturing PMI for April (http://trueeconomics.blogspot.ie/2015/05/5515-bric-manufacturing-pmi-further.html), so now let's take a look at the Services PMIs.

• Brazil Services PMI reading for April came in at 44.6 - marking rapid contraction in the sector that is worse than 47.9 reading in March. Overall, 3mo average through April now stands at 48.3, which marks worse performance than already contractionary 48.7 for the 3 months through January 2015. 3mo average through April 2014 was 50.7. April was the second consecutive month of readings below 50 and over the last 9 months, there were only two months of the PMI reaching above 50.0.
• Russian Services PMI were covered ind entail here: http://trueeconomics.blogspot.ie/2015/05/7515-russian-services-and-composite.html. Dynamically, April reading of 50.7 came in as a surprise, breaking a 6mo-long streak of sub-50 postings. 3mo average through April is at very low 46.0 and 3mo average through January 2015 was even worse - at abysmal 44.7. A year ago, 3mo average through April 2014 stood at 48.4. Despite improved performance in April, it is hard to see Services PMI breaking the sub-50 trend in the medium term.
• Chinese Services PMI came in at a marginally stronger growth, posting a reading of 52.9 in April compared to 52.3 in March. This is the third consecutive month of rising PMI readings and 3mo average through April 2015 currently stands at 52.4, which is marginally lower than 3mo average through January 2015 (52.7), but somewhat above 3mo average through April 2014 (51.4).
• India Services PMI came in at 52.4, marginally lower than 53.0 in March 2015, marking second consecutive month of PMI declines. 3mo average through April 2015 is at 53.1 which is stronger than 52.0 for the 3mo through January 2015 and significantly above 48.3 3mo average through April 2014.

Full summary of Manufacturing and Services PMIs changes here:

As the above indicate, India remains on the upward PMI trend in Services sectors against flat, but above 50.0, trend for Manufacturing sectors. Brazil remains on downward trends in both Services and Manufacturing sectors, while China remains on a relatively weak upward trend in Services and weak downward trend in Manufacturing. Russia is too volatile to call on Services side and weak, but stabilising on Manufacturing side.

Combining the two sectors, overall activity in the BRIC economies suggests temporary (for now) convergence of Russian composite indicator to the upside, against BRIC ex-Russia indicator to the downside.

Once we take into account relive sizes of each BRIC economy in the global economy, BRIC group contribution to global growth appears to continue trending to the downside, as shown below:

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.

6/1/2015: BRIC PMIs: Weaker Outrun in December

Markit released PMIs for all BRIC countries for both Services and Manufacturing covering December 2014. Here are the main results.

Starting with manufacturing:

• Brazil Manufacturing PMI posted its first 50+ reading after 3 months of consecutive sub-50 readings. December PMI came in at 50.2, which is basically signalling no statistically significant growth. On a quarterly basis, Q4 2014 average came in at 49.3 - a contraction, against 49.3 (yep, same) for Q3 2014 and 50.1 (almost no growth) in Q4 2013.
• Russian Manufacturing PMI for December came at disappointing 48.9, marking the first month of sub-50 readings since June 2014. Q4 2014 average is at 50.3 (basically near-zero growth) against Q3 2014 reading of 50.4 (very weak growth) and Q4 2013 reading of 50.0 (stagnation).
• China Manufacturing PMI came in at 49.6, the first monthly contraction that follows six consecutive months of at or above 50 readings. Q4 2014 average was 50.0 - meaning Chinese manufacturing posted flat growth across the quarter. Q3 2014 average was 50.7, same as Q4 2013. Overall, there are some very serious weaknesses in Chinese manufacturing sectors.
•  India Manufacturing PMI jumped from 53.3 in November to 54.5 in December, signalling acceleration in activity in the sector. Q4 2014 average is at 53.1 - up on 52.0 average for Q3 2014 and on 50.5 average for Q4 2013.

Now, Services:

• Brazil's Services PMI was even worse, set at 49.1 in December (a shallow contraction), continuing with sub-50 readings for the third month in a row. Q4 2014 average is at 48.6 (outright contraction), against Q3 2014 average of 50.5 (weak expansion) and 52.1 (stronger expansion) in Q4 2013.
• Russian Services PMI stood at 45.8 - sharp contraction - in December 2014, marking third consecutive month of sub-50 readings. The index averaged less than impressive 45.9 in Q4 2014, showing severe strains from collapse in domestic services, such as financial services. The index averaged 50.1 in Q3 2014 and 53.0 in Q4 2013.
• China Services PMI surprised to the upside, posting 53.4 reading in December, up on 53.0 in November. Q4 2014 average is at 53.1 - faster growth signal compared to Q3 2014 reading of 52.7 and Q4 2013 reading of 52.0.
• India Services PMI, lastly, posted a slight de-acceleration in growth, slipping from 52.6 in November to 51.1 in December. Q4 2014 reading is now at 51.2, which marks a slowdown in growth from 52.2 index reading in Q3 2014 and47.0 reading in Q4 2013.

And a table and a chart summarising changes in both sets of PMIs

Note the increase in weaker growth signals in December data compared to previous month, driven by poorer PMIs in Manufacturing and by unchanged performance outlook in Services. Also note, per chart above, Russia not only acts as a main downward driver for the BRIC overall PMI-related performance, but it shows strong decoupling in the direction of trend from January-March 2014 on, with the divergence now accelerating over the last three months.

3/12/2014: Russia Services & Composite PMIs: November

Pretty tough news for Russian Services and Composite PMIs for November.

As a reminder, Manufacturing PMI for November posted a nice surprise, rising to 51.7 in November from 50.3 in October. However, as I noted in the analysis of Manufacturing figures here: http://trueeconomics.blogspot.ie/2014/12/1122014-russia-manufacturing-pmi.html the devil was always in the services PMI data.

Services PMI came in significantly to the downside. November Services PMI reading fell to an abysmal 44.5 from already poor 47.4, marking second month of contraction, and a sharpest rate of contraction since May 2009.

3mo MA is now at 47.5, and 3mo MA for the period through August is at 49.9, which means 6 months of continued declines (on average) in the sector activity. In 3mo through November 2013, the index averaged 52.3.

Composite PMI, driven by Services downside, fell off the cliff from 49.1 in October to 47.6 in November, marking an outright statistically significant contraction. 3mo average through November 2014 is at 49.2 against 3mo average through August at 50.8 and 3mo average through November 2013 at 52.2.

All three PMIs taken together show continued strong trend to the downside, a trend that was clearly established in Q4 2012 first on foot of structural weaknesses, further reinforced by sanctions and counter-sanctions, plus now being strongly propelled by the drop in global energy prices. Additional driver to the downside is the global environment that currently strongly disfavours all BRICs (here is my analysis of BRICs Manufacturing PMIs: http://trueeconomics.blogspot.ie/2014/12/2122014-bric-manufacturing-pmis.html and stay tuned for analysis of BRICs composite and services data coming up later this week).

Overall, the weaknesses in Russian economy continue to persist and the downside to the Composite PMI index suggests that we are now likely to see contraction in economic activity in Q4 2014. As I predicted before, official recession will most likely be unavoidable in Q4 2014 - Q1 2015. The question now is at what rate the economy will be contracting.

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.

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.

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.

1/7/2014: Russia Manufacturing PMI: June 2014

Russia's Manufacturing PMI (released by Markit and HSBC, full release here) showed that contraction in Manufacturing moderated to 49.1 in June 2014, compared to 48.9 in May 2014 - a move that is statistically not significant. The index remains below 50.0, although in the range where deviation from 50.0 is also not statistically significant, signalling continued mild contraction/stagnation in Russian manufacturing.

This marks 8th consecutive month of sub-50 readings and over the last 12 months there was only one month with a reading above 50.0 (back in October 2013). While geopolitical crisis in Ukraine is weighing on Russian economy, the decline in performance set on around May-July 2013, well before the instability in Ukraine manifested itself.

3mo MA through June is now at 48.8, which is marginally slower rate of contraction than signalled by the 3mo MA through March (48.3) and is substantially worse than 3mo MA of 50.9 recorded in April-June 2013.

7/5/2014: Russia PMIs: signalling second month of recessionary pressures

Russia's HSBC-Markit PMIs are signalling contracting economy for the second month in a row.

Manufacturing PMI is down at 48.5 which is marginally better (slower rate of contraction) than in March (48.3) and on par with the rate of decline measured in February (48.5). April marks the sixth consecutive month of below 50 readings.

3mo MA now stands at 48.4 which is down marginally from 48.7 for 3mo average through January 2014 and is down significantly on 51.1 3mo average back in February-April 2013.

Current 3mo average is statistically barely at the bound of recessionary reading (48.3).

Meanwhile, services index weakened further from March 47.7 to 46.8 in April. This is the second consecutive month of below 50 readings. 

3mo MA now stands at 48.4 which is down strongly from 52.2 for 3mo average through January 2014 and is down massively on 54.5 3mo average back in February-April 2013.

Current 3mo average is statistically below the bound of recessionary reading (47.2).

Composite PMI is also in a second consecutive monthly reading below 50.0 - March 2014 was 47.8 and April 2014 came in at 47.6.

3mo MA is at 48.5 which is down on 51.5 for 3mo average through January 2014 and is down significantly on 53.6 3mo average back in February-April 2013.

Current 3mo average is statistically above the bound of recessionary reading (47.6).

It is worth noting that weaknesses in Russian Composite PMI started well ahead of the current geopolitical risks amplification and reflect structural issues with the Russian economy. However, the rate of decline as well as weakness spread across two sectors increased since the beginning of this year.