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

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

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

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


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

Chart and table below summarise the BRIC’s outlook:

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

6/1/16: BRIC Composite PMIs: December

In recent posts, I covered Manufacturing sector PMIs for BRIC economies based on monthly data and Services Sector PMIs here.

Now, let’s consider Composite PMIs for BRIC:


Brazil Composite PMI fell from 44.5 on November to 43.9 in December, As the result, the economy posted 10th consecutive month of sub-50 readings, and since April 2014, Brazil’s economy registered above 50 readings in only three months, with none of these three readings being statically significantly different from 50.0. The last time Brazil’s Composite PMI posted reading statistically consistent with positive growth was in February 2013.

In December, both Manufacturing and Services sectors indicated contracting activity, with Markit concluding that “Private sector activity in Brazil continued to plunge in December as a deepening economic retreat contributed to a further contraction in new business. The seasonally adjusted Composite Output Index fell from 44.5 in November to 43.9 at the year end, pointing to a sharp and stronger rate of reduction. Whereas the downturn in manufacturing production eased (though remained severe), services activity declined at a quicker pace.”

Over 4Q 2015, Brazil Composite PMI averaged 43.7 which is about as bad as the average of 43.6 achieved in 3Q 2015 and much worse than already contractionary average of 49.0 posted in 4Q 2014.


Russian Composite PMI was covered in detail here. Overall, Russia’s Composite index slipped into contraction during December, falling to 47.8, from 50.5 in November, with the decline in output reflected across both manufacturing production and services activity. Overall, Russian economy’s composite PMI averaged 49.1 in 4Q 2015 which is much worse than 50.4 average for 3Q 2015. The data strongly suggests that not only did the economy failed to attain stabilisation, but that growth might have turned more negative in 4Q 2015.


Chinese Composite PMI also signalled declining business activity in December, falling to 49.4 from 50.5 in November. Overall, China posted four months of below 50 readings on Composite PMIs out of the last 5 months and the last time Chinese Composite PMI was consistent with statistically significant growth was in August 2014. In 4Q 2015, Chinese Composite PMI averaged 49.9, which is better than 3Q 2015 average of 49.2, but much worse than the 4Q 2014 average of 51.6. Unlike Russia and Brazil, which posted sub-50 readings across both Manufacturing and Services, China posted sub-40 reading in Manufacturing and above 50 reading in Services, That said, the Services reading was 50.2 - statistically consistent with zero growth - and the second weakest on record (the weakest point was 50.0 in July 2014).


India Composite PMI rose unexpectedly from November’s five-month low of 50.2 to a four-months high of 51.6 in December. Thus, per Markit, the index was “indicative of a rebound in growth of private sector activity. Whereas manufacturing production decreased for the first time since October 2013, services activity increased at an accelerated pace.”

Further per Markit: “Leading services activity to increase was a solid rise in incoming new work, one that was faster than that seen in November. Anecdotal evidence highlighted strengthening demand conditions. Conversely, manufacturing order books decreased, with panellists indicating that demand had been suppressed by the Chennai floods. Across the
private sector as a whole, new business inflows expanded at a faster pace that was, however,
modest.”

4Q 2015 Composite PMI for India stood at 51.5, down from 52.1 in 3Q 2015 and down on 52.2 average for 4Q 2014.


Overall Russia was a negative contributor to the BRIC Composite Activity Index dynamic in December, although overall ex-Russia group performance continued to deteriorate in December faster than in November, as indicated in the chart below:

Note: Composite Activity Index is based on my own calculations weighing BRIC economies by their shares of global GDP. The Index is based on a scale of 100=zero growth.

In 4Q 2015, average Composite Activity Index for BRIC ex-Russia was 96.7 which was marginally better than in 3Q 2015 (86.5) but worse than 101.8 average for 4Q 2014.

Overall 4Q 2015 BRIC Composite Activity Index stood at 99.0, down on 99.2 in 3Q 2015 and on 102.1 recorded in 4Q 2014. 

The chart below shows a clear downward trend in BRIC activity setting on from June 2014 and accelerating since May 2015.

6/1/16: BRIC Services PMIs: December

In recent posts, I covered Manufacturing sector PMIs for BRIC economies based on monthly data (http://trueeconomics.blogspot.ie/2016/01/4116-global-manufacturing-weighted-down.html) and Russian Manufacturing PMIs based on quarterly data (http://trueeconomics.blogspot.ie/2016/01/4116-russian-pmi-in-4q-2015-signalling.html).

The net outrun was that global manufacturing has ended 2015 an inch closer to zero growth / stagnation point and certainly nowhere near the levels of growth consistent with amplification in global economic growth rates forward. Most of this trend is down primarily to BRIC economies all of which have seen Manufacturing PMI falling below 50 marker for the first time since March 2009. As noted, this evidence strongly suggests overall continued downward pressures on growth in world’s largest emerging markets.

Now, consider Services PMIs.


Russian Services PMI data was covered in the earlier post here: http://trueeconomics.blogspot.ie/2016/01/4116-russia-services-manufacturing-pmis.html on monthly basis and on quarterly basis here: http://trueeconomics.blogspot.ie/2016/01/4116-russian-pmi-in-4q-2015-signalling.html. The key takeaway from these was that the data strongly suggests that not only did the economy failed to attain stabilisation, but that growth might have turned more negative in 4Q 2015 in both services and manufacturing sectors.


China Services PMI eased to 50.2 in December, down from 51.2 in the previous month, statistically signalling zero growth in the Services sector. This marks the second-lowest index reading since the series began in November 2005 (behind July 2014). 4Q 2015 average reading stands at 51.1, which is weaker than 3Q reading of 51.9 and well below the 4Q 2014 reading of 53.1.

Per Markit release: “Relatively subdued client demand … was highlighted by only a marginal
increase in new work at service providers that was one of the weakest seen in the series history.”


India Services PMI unexpectedly hit a 10-month high at 53.6 in December up on November’s zero growth 50.1. Overall, Services PMI came in with a strong indication of positive expansion in output across the sector. This pushed 4q 2015 average to 52.3, ahead of 3Q 2015 average of 51.3 and above 51.2 average for 4Q 2014.

Per Markit: “Sub-sector data indicated that output rose in four of the six broad areas of the service economy, the exceptions being Hotels & Restaurants and Transport & Storage. The best performing categories in December were ‘Other Services’ and Financial Intermediation. Leading services activity to increase was a solid rise in incoming new work, one that was faster than
that seen in November. Anecdotal evidence highlighted strengthening demand conditions.” This puts Services dynamics at odds with Manufacturing which posted a significant contraction.


Brazil Services PMI tanked from already abysmal (albeit 8-mo high) 44.5 in November to 43.9 in December, with economy beating “deepening economic retreat”.

Per Markit: “Survey participants commented that worsening economic conditions led new business and activity to decrease. All six monitored subsectors posted lower activity in December, a trend that has been observed throughout the past eight months. The quickest rates of decline were seen in ‘Other Services’, Renting & Business Activities and Post & Telecommunication. Leading services activity to decrease was a further drop in incoming new work. Having accelerated since November, the pace of reduction was among the fastest in the survey history. Panellists indicated that a deepening economic downturn restricted clients’ confidence in committing to new projects.”

4Q 2015 average for Brazil Services PMI now stands at 44.0, up on 3Q 2015 reading of 41.9, but overall so poor, one can’t talk about any improvement at these levels of signalled contraction.


Summary of movements in PMIs for BRIC economies is provided in the table below:

Chart illustrates trends in Services:

I will be covering composite PMIs next, but overall Services PMIs conclusion is that a positive improvement in India was offset by deteriorating growth in China and outright fall-offs in activity in Russia and (much worse) in Brazil. Overall, the data from Services compounds the already rotten data from Manufacturing.

4/1/16: BRIC Manufacturing PMIs: December 2015 and 4Q 2015

BRIC Manufacturing PMIs posted another sector-wide weakening in growth conditions in December, ending 2015 on foot of an outright contraction across the sector in all BRIC economies for the first time since late 2013.

Russian manufacturing PMI posted a deterioration in sector performance in December, falling to 48.7 from 50.1 in November. This reverses two consecutive months of above 50 readings in October and November. On a quarterly basis, 4Q 2015 average reading was 49.7, which is better than 48.4 average for 3Q 2015, but still below 50.0 line. Overall December reading was the weakest since August 2015 and signals that the much anticipated stabilisation of the Russian economy did not take place in December. More detailed analysis of Russian PMIs is available here for monthly data and here for quarterly data. Overall, Russia was the third weakest PMI performer in Manufacturing sector terms within the BRIC group.

Brazil’s Manufacturing PMI remained deeply below 50.0 mark in December, although rising to 45.6 from 43.8 in November. December reading stands as the highest in 3 months, but still signals sharp rate of activity contraction. 4Q 2015 average is at 44.5, which is down on 46.7 average for 3Q 2015. Brazil has now posted Manufacturing PMI readings below 50.0 for 11 months in a row, the longest such record in the group of BRIC countries. In addition, Brazil remained the weakest performer in terms of Manufacturing PMIs in the BRIC group.

Per Markit: “Brazilian manufacturing companies reported worsening operating conditions at the end of 2015. December saw output and new orders dip at rates that, although slower, remained sharp…Amid evidence of cashflow problems, stocks of purchases and post-production inventories both decreased at rates that were the quickest in over six years. …severe downturn in the sector that was evident among the three monitored market groups: consumer, intermediate and investment goods. …December data pointed to a further decline in incoming new work, the eleventh in as many months. …Panellists indicated that a deeper economic retreat and falling purchasing power among consumers had led domestic demand to dwindle. Conversely, new orders from abroad rose. The weaker real had reportedly supported firms in securing new business from external clients. That said, the overall pace of expansion was only marginal.”

China Manufacturing PMI fell from 48.6 in November to 48.2 in October, marking 10th consecutive month of sub-50 readings and the weakest reading in 3 months. On a quarterly basis, 4Q 2015 reading was 48.4 which is somewhat better than 47.4 reading for 3Q 2015, although still signifying overall contraction in the sector. By all metrics, Chinese Manufacturing PMI came in second weakest in the BRIC grouping after Brazil.

Per Markit: “Operating conditions faced by Chinese goods producers continued to deteriorate in December. Production declined for the seventh time in the past eight months, driven in part by a further fall in total new work. Data suggested that client demand was weak both at home and abroad, with new export business falling for the first time in three months in December. As a result, manufacturers continued to trim their staff numbers and reduce their purchasing activity in line with lower production requirements. Meanwhile, deflationary pressures persisted, as highlighted by further marked declines in both input costs and selling prices.” Overall, this was the first time exports orders fell since September 2015.

India Manufacturing PMI posted a moderate drop from 50.3 in November to 49.1 in December, putting PMI reading below 50.0 line for the first time since June 2015. However, on a quarterly average basis, 4Q 2015 came in at 50.0, signalling zero growth in the sector over the last quarter of 2015, down from relatively robust growth posted in 3Q 2015 (with PMI averaging 52.1). PMI averaged 51.7 in 2Q 2015. The data confirms my previously expressed view that India is now skirting dangerously close to a manufacturing recession and that overall economic growth conditions in the economy have deteriorated significantly compared to 2014.

Per Markit: “Indian manufacturers saw business conditions deteriorate at the end of 2015. December’s incessant rainfall in Chennai impacted heavily on the sector, with falling new work leading companies to scale back output at the sharpest pace since February 2009. On the price front, inflation rates of both input costs and output charges were at seven month highs. …Consumer goods bucked the sub-sector trend and was the only category to see improving business conditions in December as production and new orders rose. Conversely, incoming new work and output fell in both the intermediate and investment goods market groups. Having risen for 25 straight months, total
manufacturing production in India fell during December. Furthermore, the rate of contraction was the sharpest in almost seven years.”

Summary table:

And a chart to illustrate

Hence, overall, as of December, 

• Brazil manufacturing PMI continued to move along the general downward trend that started around 1Q 2013 and runs unabated since then, with Manufacturing recession setting in firmly from 2Q 2015 on. 
• China, having displaced Russia for the second weakest position in the BRIC economies in terms of Manufacturing PMIs back in July 2015 remains the second weakest link in the BRIC group. Chinese manufacturing has been posting negative trend in PMIs since mid 2014, although in the last 3 months of 2015 this trend somewhat improved. 
• Meanwhile, Russian Manufacturing is once again taking on water, having reverted down from a positive sub-trend that was present over May-November 2015.
• Last, but not least, the bright star of India is now fading in terms of Manufacturing PMIs, with both trend (downward since December 2014 and more pronounced downward trend since July 2015) and absolute level of PMI reading signalling a risk of manufacturing sector recession in India. 

Overall, we now have all BRIC Manufacturing PMIs below 50 line for the first time since March 2009. This strongly shows overall continued downward pressures on growth in world’s largest emerging markets.

4/1/16: Russian PMI in 4Q 2015: Signalling Continued Weaknesses

Having Russian PMIs for December 2015 allows us to take a look at the economy quarterly performance signals. As noted in the previous post (http://trueeconomics.blogspot.ie/2016/01/4116-russia-services-manufacturing-pmis.html) with the decline in output reflected across both manufacturing production and services activity, Russian economy’s composite PMI averaged 49.1 in 4Q 2015 which is much worse than 50.4 average for 3Q 2015, suggesting that not only did the economy failed to attain stabilisation, but that growth might have turned more negative in 4Q 2015.

Let’s take a closer look at the quarterly averages by sector.

Russian Manufacturing PMI for 4Q 2015 stood at 49.7, which is a gain on 48.4 in 3Q 2015 and marks the strongest quarterly reading since 4Q 2014, but also marks the fourth consecutive quarter of sub-50 readings. The weaknesses in Manufacturing are especially troubling, as the sector is broadly targeted for imports substitution - a major policy shift by the Government since the start of 2015. Making matters worse, the sector should have benefited from strong ruble depreciation over the last 12 months, which - as it appears so far - did not lead to substantial increase in exporting activity. In part, this reflects weaknesses in global demand, but in part it reflects structural problems in Russian manufacturing that find goods supplied by the sector of generally non-competitive quality for global markets, even amidst improved price competitiveness.

Overall, we now have four consecutive quarters of sub-50 readings in Manufacturing sector - for the first time since 3Q 2008-1Q 2009 period.

Russian Services PMI for 4Q 2015 stood at 48.5, down sharply on 50.7 reading in 3Q 2015 and marking the weakest reading in the series since the start of 2Q 2015.Disappointingly, 4Q reading for Services sector broke two consecutive quarters of above 50 readings and done so sharply. Since the start of 1Q 2014, the sector has now posted sub-50 readings in 5 out of 8 quarters, and it managed to post statistically significant readings above 50 in only two quarters.

The above has meant that the composite activity index (distinct from Composite PMI) for Russian stood at 93.9 in 4Q 2015, which is an improvement on 90.3 in 3Q 2015, but marks fifth consecutive quarter of the overall production growth being negative (across combined services and manufacturing sectors). While 4Q composite indicator was the strongest in three quarters, it remains extremely weak (statistically significantly below zero growth marker of 100) and the third weakest of all quarters since the start of 3Q 2009.

On the net, therefore, while Russian economy posted some 4Q signals of growth consistent with less sharp contraction across combined Services and Manufacturing sectors, than in 2Q-3Q 2015, the deterioration in growth conditions in the economy in 4Q 2015 remained pronounced and this strongly suggests that we did not witness stabilisation of the Russian economy in 4Q 2015.


Stay tuned for analysis of BRIC PMIs next.

4/1/16: Russia Services & Manufacturing PMIs: December 2015

Russian PMIs are out for December 2015, so here is monthly data reading:

Russian Manufacturing PMIs posted a deterioration in sector performance in December, falling to 48.7 from 50.1 in November. This reverses two consecutive months of above 50 readings in October and November. It is worth noting that October-November readings were not statistically distinct from 50.0. On a quarterly basis, 4Q 2015 average reading was 49.7, which is better than 48.4 average for 3Q 2015, but still below 50.0 line. Overall December reading was the weakest since August 2015 and signals that the much anticipated stabilisation of the Russian economy did not take place in December.

Per Markit release: “Leading the deterioration in business conditions at Russian manufacturers was a fall in production. The rate of contraction quickened to the fastest since May 2009, with the majority of panellists linking this to a drop in new order intakes. As a result, a lower volume of post-production inventories was recorded. Meanwhile, Russian manufacturers continued to shed jobs during December. Falling employment has been reported in every survey period since July 2013, with the rate of contraction quickening to the sharpest in three months. The decline in staff numbers was matched by a solid deterioration in outstanding business volumes. Backlogs of work have been depleted in each of the past 34 survey periods. Elsewhere, incoming new orders slipped into decline in December, ending a three-month sequence of growth. However, the drop in new work was marginal and centred on intermediate goods producers. Data suggested that the main source of weakness was external, as export orders were down sharply.”

Chart to illustrate:

Russian Service PMI also reported a fall in output marking the third successive month of declines, driven by a slight decrease in new business levels. Job cuts continued in the sector as outstanding business deteriorated. The headline seasonally adjusted Russia Services Business Activity Index fell to 47.8 in December from already contractionary 49.8 in November. In 4Q 2015, average Services PMI reading was 48.5 against 50.7 in 3Q 2015, showing stronger deterioration in growth conditions in the sector in 4Q 2015. Current reading of 47.8 is the joint-weakest (with October 2015) for nine months.

Per Markit release: “New business levels at service providers slipped further into decline during December. However, the rate at which new work deteriorated was only marginal. Where a lower volume of new sales was recorded, panellists linked this to a combination of waning demand in the sector and payment difficulties being experienced by customers… With business activity at Russian service providers declining, pressures on operating capacity fell further in December. The rate at which work-inhand depleted eased to the slowest in three months yet remained solid overall. Anecdotal evidence suggested that lower backlogs of work were attributed to a drop in new business. Falling staff numbers have been reported in every month since March 2014, with the latest drop at a faster pace than in November. There was some evidence that lower employment reflected squeezed cash availability at service providers.”

Chart to illustrate:

Finally, Russia’s Composite index slipped into contraction during December, falling to 47.8, from 50.5 in November, with the decline in output reflected across both manufacturing production and services activity. Overall, Russian economy’s composite PMI averaged 49.1 in 4Q 2015 which is much worse than 50.4 average for 3Q 2015.

The data strongly suggests that not only did the economy failed to attain stabilisation, but that growth might have turned more negative in 4Q 2015.

I will be posting on quarterly figures for PMIs next, so stay tuned for more.

3/12/15: BRIC Composite PMIs: November

In two previous posts, I have covered November BRIC PMI (released by Markit):

• For Manufacturing Sector and
• For Services Sector.

Summary table of both here:

Now, consider Composite PMI readings:

Russian Composite PMI came in at 50.5 in November, which marks an improvement on 49.0 reading in October. Per Markit: “…the composite index for Russia returned to expansionary territory in November. At 50.5, up from 49.0, the latest reading was led by the manufacturing sector, which registered its strongest rate of growth in one year.” Composite employment activity contracted. Overall, the pattern since May 2015 has been for a one month of above 50 reading followed by a month of sub-50 reading. Thus, 3mo average through November is now at 50.2, while 3mo average through August is at 49.8. Both compare favourably to the 3mo average through November 2014 which stands at 49.2, but both 3mo averages are weak. In simple terms, Russian economy is bouncing along the bottom of the sub-cycle with no catalyst to the upside.

China Composite PMI came in at 50.5 in November, breaking three consecutive months of sub-50 readings, but posting, nonetheless an extremely weak expansionary reading. 3mo average is at 49.5 through November 2015, down on 50.5 3mo average through August 2015 and down on 51.7 3mo average reading through November 2014. All signs are of a major slowdown in the Chinese growth counting in November. Per Markit: “business activity in China increased for the first time in four months in November. That said, the rate of expansion was only marginal… The renewed increase in overall Chinese business activity was supported by a further rise in service sector activity in November. That said, the pace of expansion eased since October and was only modest. …Meanwhile, manufacturing production stabilised in November, following a six-month sequence of reduction. After a solid expansion in October, total new work placed at Chinese service providers rose only slightly in November. According to panellists, relatively weak market conditions had softened client demand in the latest survey period. Furthermore, September 2015 excepted, the latest increase in new work was the slowest seen in 16 months. In contrast, manufacturing firms saw a further decline in new business during November. Though modest, the decrease in new order volumes at manufacturers offset the increase at service providers, and led to a slight fall in composite new business.”

Indian Composite PMI fell sharply from 52.6 in October to 50.2 in November. On a 3mo average basis, reading through November 2015 is at 51.5 which is marginally better than 5.4 reading in 3mo through August 2015 and down on 51.7 reading in 3mo period through November 2014. Per Markit: “Posting a five-month low of 50.2 in November (October: 52.6), the seasonally adjusted Nikkei India Composite PMI Output Index was indicative of little-change in the level of private sector activity in India. Growth of manufacturing production softened to the slowest in the current 25-month sequence of expansion, while services activity broadly stagnated. …Indian services companies saw demand growth lose strength during November, leading to the slowest rise in incoming new work since July. …Order book volumes in the manufacturing economy increased for the twenty fifth straight month, although at the weakest pace in this sequence.”

Brazil’s Composite PMI remained deep into contraction territory at 44.5 in November, which is an improvement on an abysmal 42.7 reading in September and October 2015. On a 3 mo average basis, reading through November 2015 stands at 43.3, which is below the already weak 43.7 reading for the 3mo period through August 2015 and well below the 49.2 reading through November 2014. November 2015 marks 9th consecutive month of sub-50 readings in the series for Brazil making the Latin American economy the worst performer in the group of BRIC economies for the ninth month running. Per Markit: “Output, new orders and employment shrunk across the manufacturing and service sectors”, with downturn being more pronounced in manufacturing. Overall “weaker contraction in private sector activity” came on foot of “a softer reduction in services output, as manufacturing production dropped at the second fastest pace in 80 months.”

Charts to summarise the trends (note: charts use my own Composite BRIC index based on 100=zero growth line):

The above chart clearly shows that Russia is currently acting as a positive driver for BRIC Composite PMI dynamics. The core downside driver is Brazil.

Summary: per chart above, BRIC economies continued to exert negative pressure on global growth rates in November for the fourth consecutive month running. More importantly, BRIC economies posted growth conditions consistent with slower (than global ) growth since July 2014.  This scenario - of negative impact of BRIC growth on global growth conditions - is likely to remain in place in months to come as all BRIC economies continue to face downside risks to their growth rates.

3/12/15: BRIC Services PMI: November

BRIC Services PMIs are in for November, so let’s take a quick look at the headline numbers:

Russia: 
Russian Services PMI came in at 49.8 in November - a whisker away from 50.0 - and up on 47.8 in October. This marked second consecutive month of sub-50 readings in the series. 3mo average through November is at 49.6, which is weaker than the 3mo average through August 2015 (50.1) but stronger than the 3mo average through November 2014 (47.5). Per Markit: Service sector business activity declined only fractionally in November, although new business contracted for first time in eight months and outstanding business deteriorated further. “With backlogs of work falling, Russian service providers continued to shed jobs during November. Moreover, job cuts have been recorded in every survey period since March 2014. Panel members mentioned a contraction in employee numbers reflected efforts to cut excess capacity”.

China: 
Chinese Services PMI weakened in November to 51.2 from 52.0 in October, with 3mo average through November now at 51.2, down on 52.4 3mo average through August 2015 and on 53.1 average through November 2014. Given that Chinese Services PMI never registered sub-50 reading, current reading is consistent with statistically zero growth. Per Markit release, the index is now in a six=months long trend of falling PMI readings. “After a solid expansion in October, total new work placed at Chinese service providers rose only slightly in November. According to panellists, relatively weak market conditions had softened client demand in the latest survey period. Furthermore, September 2015 excepted, the latest increase in new work was the slowest seen in 16 months.”

India: 
Indian Services PMI posted a significant retrenchment from 53.2 in October to 50.1 in November, effectively signalling zero growth in the sector and falling to the lowest level in 5 months. 3mo average through November is at 51.5, well ahead of current month reading that matches exactly 3mo average through August 2015. 3mo average through November 2014 stood at 51.4. Per Markit: “Sub-sector data indicated that output growth in the Financial Intermediation, Post & Telecommunication, Renting & Business Activities and ‘Other Services’ categories was offset by declines at Transport & Storage and Hotels & Restaurants firms. In fact, the latter recorded a sharper rate of reduction. Indian services companies saw demand growth lose strength during November, leading to the slowest rise in incoming new work since July. Survey members blamed fierce competition and frail economic conditions for the slowdown in growth of new work.”

Brazil: 
Brazil remains the weakest link in the BRIC group in terms of economic activity, with country Services PMI rising to 45.5 in November from 43.0 in October, still signalling sharp contraction in the sector, and marking ninth consecutive month of sub-50 readings. On a 3mo average basis, 3mo average through November was 43.4, which is an improvement on 3mo average through August 2015 (41.3) but down on 3mo average through November 2014 (49.3). Per Markit: “Sub-sector data highlighted a broad-based recession, with output, new business and employment falling across all six monitored categories. Leading services activity to decrease was a further drop in incoming new work, the ninth in as many months. Despite being the softest since August, the rate of reduction was sharp. Evidence from survey participants indicated that demand had been suppressed by the country’s fragile economic situation.”

Summary: Overall, therefore, BRIC services sectors have been performing poorly in November 2015, with no upside to growth form the sector in any economy. Brazil is the weakest performer in the group, with Russia being second weakest. India’s growth momentum of July-October 2015 is now exhausted, while China showing downward trend in Services growth since July 2015.


Next up: Composite PMIs and analysis

6/11/15: BRIC Composite PMIs for October: Some Sunny Spells Amidst a Downpour

Having covered 

• BRIC Manufacturing PMIs for October here, and
• BRIC Services PMI here (),

now, let’s take a look at Composite PMIs

India:

India’s composite PMI rose from 51.5 in September to 52.6 in October, indicating stronger growth in private sector activity across the country and the joint-fastest pace of growth since March 2015. Per Markit: “The latest improvement was driven by services, as goods producers saw growth of production wane.” 3mo average though October 2015 stood at 52.2, signalling faster growth in the 3mo average through July (50;9) and an increase in there ate of growth compared to 3mo period through October 2014 (51.2). This marks fourth consecutive month of above 50 reading for India and also a fourth consecutive month of India leading BRIC group in growth terms.

China: 

China Composite PMI signalled some early signs of stabilisation of Chinese business activity in October, posting reading of 49.9, up from September’s 80-month low of 48.0. Nonetheless, the index reading in October was the third lowest since May 2014. On a 3mo average basis, 3mo reading through October 2015 was at poor 48.9, down on 50.9 for the 3mo period through July 2015 and down on 51.9 3mo average through October 2014. October marked a third month in a row of negative growth across the Chinese economy, although relative position of Chinese economy in BRIC rankings did improve from being second worst in July-September to third worst in October.

Russia:

Russian Composite PMI posted a very disappointing reading of 49.0 in October, down from 50.9 in September. On a 3mo average basis. Russian Composite PMI fell from 50.1 reading for the 3mo average through July 2015 to 49.7 for the 3mo period through October. 3mo average through October 2014 was 50.0. Per Markit release: “The Russian service sector returned to contraction territory at the start of the fourth quarter of 2015 as new work stagnated and excess capacity persisted. …In contrast, manufacturing output rose for a second successive month and to the highest degree since

last November. However, growth was insufficient to prevent the composite index slipping to a seven month low of 49.0 (from 50.9 in September).” Thus, in October, Russia moved to the position of second weakest growth in the BRIC group.

Brazil:

Brazil’s Composite PMI remained unchanged at 42.7 in October, staying below 50.0 reading threshold for the eighth month running, “highlighting the longest sequence of continuous decline in Brazilian private sector output since the global financial crisis. Sharp rates of contraction were noted in both the manufacturing and service sectors. …the latest reduction in employee headcounts was the most pronounced since composite data were first available (March 2007).” 3mo average through October stood at abysmally poor 43.4, which is marginally worse than 43.5 3mo average through July 2015 and significantly below the recessionary reading of 49.5 recorded over the 3 months through October 2014.

As chart above indicates, overall Composite Activity Index for BRIC economies as a whole continued to take water with both trend and current reading well below 100.0 marker of zero growth.

Brazil continues to lead BRIC group into recessionary territory in terms of aggregate growth, with Russia now ranked as second lowest growth momentum economy. On a simple average basis, BRIC Services PMI came in at around 49.0 with Manufacturing coming at 48.3, suggesting that overall growth conditions remain weak across the world’s leading EMs. 

6/11/2015: BRIC Services PMIs: Continued Weakness in October

Having covered BRIC Manufacturing PMIs for October here, now, let’s take a look at Services PMIs

India:
Indian Services PMI rose to an eight-month high of 53.2 in October form September reading of 51.3. This marks fourth consecutive month of above 50.0 readings in the sector. 3mo average through October 2015 stood at 52.1, up on 49.4 3mo average reading though July 2015 and up on 50.7 3mo average through October 2014. Per Markit, “activity growth was noted in three of the six surveyed categories… Underpinning growth of services activity was a quicker increase in new business inflows. Incoming new work expanded at a solid pace that was the most pronounced since February.” In summary terms, Indian services performance improved in October, although growth rates singled remain below their historical average of 54.6.

China: 
China Services sector activity rose at a quicker rate in October (52.0) compared to September (50.5) and the fastest rate of expansion since July 2015. Per Markit, however, “…the latest reading was indicative of only a modest rate of growth that was slower than the historical average. Service sector companies saw a further rise in total new business during October. In line with the trend for activity, the rate of new order growth picked up from September’s recent low and was solid overall.” That said, 3mo average reading for the index through October stood at 51.3, which is lower than 3mo average reading of 53.0 for the period through July 2015 and is down on 53.5 3mo average through October 2014. Thus, overall, China’s Services sector has managed to turn around persistent declines in PMI readings over the previous 3 months, but activity levels in October stood well below historical average of 55.2.

Russia:
Russian Services PMI posted a disappointing sub-50 reading in October at 47.8 down from 51.3 in September, basically quashing the hopes of growth momentum reversal. 3mo average through October is now at 49.4, which is worse than 51.3 average for the 3mo period through July 2015 and is identical to the reading for the 3mo period through October 2014. Per Markit release: “Latest data marked the third time in the past five months that a sub-50.0 reading has been recorded, and October’s index level was also the lowest seen since March.” This contrasts the latest reading for Manufacturing PMI that posted an improvement rising to 50.2 in October. However, with Services in a clear contraction territory and Manufacturing statistically indistinguishable from zero growth, the Composite PMI for Russia posted sub-50 reading as well. Again, per Markit: “With the exception of the Communications sector, all services sub-categories recorded a decline in activity during the month. Sub-par performance was linked to a challenging economic environment which had a negative impact on sales, which stagnated at the aggregate service sector level in October. This thereby ended a six-month sequence of new business growth, and there were some reports that the sourcing of capital funds remained tough (although in terms of sector performance Communications was again a notable outlier,
registering a strong increase in new work).”


Brazil:
Brazil Services PMI posted another abysmally poor reading in October at 43.0, up on horrific reading back in September. On a 3mo average basis, 3mo average through October 2015 stood at 43.2, above 40.5 3mo average through July 2015, but down 49.5 recorded for the 3mo period through October 2014. This marks 8th consecutive month of sub-50 readings for the country Services sector and 9th consecutive month of sub-50 readings in Manufacturing activity. Per Markit release: “Panel member reports highlighted frail economic conditions across the country. Incoming new work received by Brazilian service providers continued to decrease in October. Furthermore, the rate of contraction was steep as highlighted by the respective index sliding to a 79-month low.”

Table below summarises main changes:

Chart below shows developing trends:

As shown above, Brazil continues to lead BRIC group into recessionary territory in the Services sectors, with latest moderation in the rate of contraction not sufficient to compensate for activity declines over the period from march 2015 on. Back in Aril 2015, Brazil pushed past Russia as the driver to the BRIC group downside and it remains in this ‘leading’ position. Another disappointing signal came from Russia, where Services PMI singled renewed and relatively sharp pressures to the downside. This single is consistent with the view of the Russian economy as being well outside the bounds of the recovery momentum. In contrast, both India and China posted improvements in the rates of growth in October in the Services sector, although Chinese data is clearly subject to serious questions about its quality.

Overall, however, on a simple average basis, BRIC Services PMI cam in at around 49.0 with Manufacturing coming at 48.3, suggesting that overall growth conditions remain weak across the world’s leading EMs.

6/10/15: BRIC Quarterly Economic Activity & PMIs: 3Q 2015

Now, as promised, the summary of 3Q 2015 BRIC PMIs and the insights these give us into global growth trends. Note: series history refers here to data from 1Q 2006, since some countries in the group only started collecting PMI data from that period.

Brazil:

• Brazil’s Manufacturing PMI averaged poorly 46.7 in 3Q 2015, which is… drum roll… an improvement on disastrous 46.1 recorded in 2Q 2015. All in, Brazil manufacturing sector contraction is now 6 consecutive quarters-long. Over the last two consecutive quarters, Brazil posted the worst Manufacturing sector performance of all BRIC economies. 
• Meanwhile, Brazil Services PMI tanked to 41.9 on 3Q 2015 average basis from already abysmal 42.3 reading in 2Q 2015. This means that Brazil Services sectors are in a deep contraction over the last 6 months and the rate of contraction accelerated in 3Q 2015. This is the worst quarterly reading in all BRIC economies for Services sector for the second consecutive quarter running and the fourth consecutive quarter of recession in Brazil’s Services. 
• While Manufacturing PMI in 3Q 2015 was the fifth lowest in history of the series, Services PMI hit its lowest level in history. In brief, Brazil is in deep trouble and is currently the worst performer across both manufacturing and services sectors of all BRIC economies. Brazil recorded now four consecutive quarters of sub-40 readings in both indices - the only economy in the BRIC group to have done so (in Russia case, such coincident sub-50 readings have occurred for the duration of only two quarters) in post-Crisis period.

Russia:

• Russian Manufacturing PMI averaged 48.4 in 3Q 2015 unchanged on 48.4 reading in 2Q 2015. This is the lowest (tied with 2Q) reading since 1Q 2014 and marks the third consecutive quarter of sub-50 readings in the sector. The level of contraction singled by 48.4 reading is, however, not particularly remarkable, marking the 6th sharpest rate of activity decline in series history.
• Russian Services PMI posted a reading of 50.7 in 3Q 2015, consistent with weak growth, following 51.0 reading in 2Q 2015 and marking two consecutive quarters of above 50 readings. Growth is still weak in the sector, with 3Q 2015 reading being 9th lowest in series history.
• Overall, Russian economy is still in a recessionary scenario, judging by PMIs although some improvement is visible in the Services side of the economy. In my view, it is too early to call the bottom of the recession, yet, but there are some potentially encouraging signs emerging.
• Russia remained the second weakest economy in the BRIC group, only marginally (by about 0.1 points) underperforming China when comparative is taken across both sectors of the economy.

China:

• Chinese Manufacturing PMI fell off the cliff in 3Q 2015, declining to 47.4 compared to 49.2 in 2Q 2015. This marks second consecutive quarter of sub-50 readings for the index. 3Q 2015 index was 3rd lowest in the history of the series, highlighting just how sharp the deterioration was. Over the last 4 quarters, Chinese manufacturing failed to post a reading above 50.0 in all quarters, meanwhile, over the last 16 quarters, Chinese Manufacturing posted a statistically significant growth reading in only one quarter.
• China Services PMI fell from 52.7 in 2Q 2015 to 51.9 in 3Q 2015. This is the 5th lowest reading in the history of the series and, although nominally above 50.0, statistically is not consistent with a signal of even moderate growth. 
• In simple terms, China is getting dangerously close to statistically zero growth across the economy, which, in my view - given the low quality of Chinese official data - can be anywhere around 3-4 percent official GDP expansion for 2015. Potentially - lower. 

India:

• Indian Manufacturing PMI continued to lead the BRIC economies indices, rising to 52.1 in 3Q 2015 from 51.7 in 2Q 2015. Still, the case of growth is 9th slowest in data series history.
• Indian Services PMI posted a strong rebound from 49.9 reading in 2Q 2015 to 51.3 in 3Q 2015. Even with this rebound, latest indicator is signalling 10th slowest rate of growth in the Services side of the economy.
• Overall, India returned to the scenario of broadly based (across both Services and Manufacturing) growth in 3Q 2015. However, considering past performance, growth across both sectors in India was anaemic in 3Q and it has been weak since the start of 2013.

Charts below illustrate key trends:

Overall, BRIC group activity has been pretty disastrous in recent quarters, as shown in the Chart below

As the above illustrates, combined BRIC Manufacturing index is currently running at 48.5 down from 49.4 in 2Q 2015 and marking second consecutive quarter of sub-50 readings. This the third worst performance level for the indicator. Across Services sectors within the BRIC economies, activity also fell in 3Q 2015 (to 50.7) from already weak 50.9 in 2Q 2015. 3Q 2015 Services reading is 5th worst in history.

Table below summarises recent changes in quarterly PMIs:

Key conclusions: 

• BRIC economies are in a sharp, structural slowdown across both manufacturing and services, with Brazil and Russia lingering in sustained recessions, China effectively falling off the growth cliff and India slowing down, but still generating positive growth. The rot is global - it is driving global trade and currencies imbalances and is also driven by global trade, demand and currencies imbalances. With the world’s largest EMs in deep trouble, one has to wonder how low can global GDP growth revisions go in months ahead.
• The structural or longer-term nature of this rot is best highlighted in the last chart above, showing clearly the dramatic trend decline in Manufacturing activity starting with 2Q 2011, followed with the onset of decline in Services side of the economy in 2Q 2013.

Note: Monthly PMIs for September were covered in previous posts:
- For Services and Composite PMIs: here.
- For Manufacturing PMIs: here.

6/10/15: BRIC Services & Composite PMI: September 2015

BRIC Services PMIs and Composite PMIs are in for September. I covered Manufacturing PMIs for BRTIC economies earlier here.

Unlike Manufacturing sector, BRIC Services sector did much better, posting overall a shallow, but positive growth.

• Russia Services PMI was covered in detail in this post. Overall, in the end Russia Services PMI reading for September ended up being tied for the highest position in the entire group alongside India’s
• India’s Service PMI came in at 51.3, down from 51.8 in August and marking third consecutive month of above 50 readings. The rate of growth singled by the Indian PMI is, however, relatively weak. 
• China Services PMI came in at 50.5, the second weakest reading for a BRIC economy and down on 51.5 in August. Statistically-speaking, just as with Russian and Indian Services indicator, Chinese Services PMI was not distinguishable from zero growth 50.0 marker. For the economy that never posted below 50 reading in its Services PMIs, however, current reading for China is probably consistent with a sector growth plummeting sharply. This is the lowest rate of activity since July 2014. September reading was also second lowest on record.
• Brazil Services PMI was the only reading below 50 in the BRIC group and at 41.7 it is a very poor reading and is below August 44.8. Brazil has now posted the weakest of Services PMIs reading for all BRIC economies every month since March 2015.

As Chart above clearly indicates, Brazil weakness is sharp and sustained over some time now. In contrast, Russia has managed some stabilisation in the Services sector with very strong upward correction starting from February 2015 low. Overall, you can also see the extremely compressed and subdued growth activity in the Sector across the BRIC economies starting with 3Q 2013 on. 

Summary table below highlights recent changes in Manufacturing and Services PMIs for the BRIC economies:

Now, let’s consider Composite PMIs.

• Again, Russia Composite PMI was covered in the separate earlier post here. In comparative terms, Russian Composite PMI was the second highest in the BRIC group after India.
• India Composite PMI came in at 51.5 in September compared to 52.6 in August, marking a deterioration in the rate of growth in the economy. 51.5 reading is border-line significant in statistical terms, suggesting possibly sharper downturn in the economic activity than simple decline of 1.1 points suggests. Still, India posted the best performing Composite PMI of all BRIC.
• China Composite PMI came in at disappointing 48.0 in September, down from an already weak 48.8 in August. Last two months readings suggest negative growth in the Chinese economy, although it is hard to call what exactly is happening in the actual economy. Nonetheless, China was a negative drag on the BRIC growth for the second month in a row.
• Brazil Composite PMI literally is tanking. It hit 42.7 reading in September, down from 44.8 in August. This marks a seventh consecutive month of composite PMI for the country signalling an outright contraction in output. 

Charts above plot BRIC Composite PMIs. Several things worth noting here are:

1. There is continued divergence in Russian PMIs (to the upside) and BRIC ex-Russia PMIs (to the downside) driven by sharp deterioration in Brazil economic environment over the last 7 months. Local peaking of BRIC ex-Russia PMIs in February 2015 is now fully exhausted and in September, BRIC ex-Russia index took a sharp nosedive. Trendiness reflect this divergence and show that it is currently well-established. In other words, although Russian economy is performing poorly, ex-Russia BRIC economies are performing even worse, even if we include into this sub-grouping a relatively well performing India.
2. Overall, BRIC Composite PMI is on a sustained downward trend since June 2014 and in July-September 2015 this downward trend accelerated sharply. BRIC Composite PMI now signals recessionary conditions across the whole group of four largest Middle-Income and Emerging Markets economies. On a longer time line, weak performance in the BRIC economies has been now a feature of the global growth environment since the end of 1Q 2013.

I will be covering quarterly PMI signals in the subsequent post, so stay tuned.

3/9/15: BRIC Composite PMI: August

Having covered Manufacturing (link here) and Services PMIs (link here) for BRIC countries, consider Composite PMIs next.

Note, to make series consistent with my previous indicator, I use x2 factor on composite PMI readings from Markit, going forward, so reference number here is not 50.0 but 100.0.

• Brazil Composite PMI firmed up marginally to 89.6 in August from 86.3 in July. This is the fifth highest reading in recent months, but sixth consecutive reading below 100. Per Markit: "Rising to a five-month high… the Brazil Composite Output Index pointed to a further, although weaker, decline in private sector output. Whereas manufacturing production decreased at a quicker rate, the reduction in service sector activity softened. … New business in the Brazilian service sector decreased for the sixth straight month in August. …Order book volumes at manufacturers dipped at the fastest pace in four years. Subsequently, the contraction in total private sector new work accelerated to the sharpest in three months."
• Russian Composite PMI was also soft, falling to 98.6 in August compared to 101.8 in July, returning the economy toward renewed recessionary momentum after fragile improvement in the first month of 3Q 2015. More on Russian Composite PMI here: http://trueeconomics.blogspot.ie/2015/09/3915-russian-manufacturing-services.html.
• China Composite PMI too posted sub-100 reading, falling to 97.6 in August compared to 101.6 in July. Per Markit release: "Though only modest, it was the fastest contraction of output seen since February 2009. The renewed decline in overall output was largely driven by a faster contraction of manufacturing production in August. Furthermore, the latest fall in manufacturing output was the quickest seen in 45 months. Meanwhile, slower growth in service sector business activity also weighed on the headline index. Consequently, total new business at the composite level fell for the first time since April 2014, albeit marginally. ...the latest expansion in service providers’ staff numbers was the weakest seen in the current two-year sequence of job creation and fractional. Job shedding persisted at manufacturing companies, with the pace of reduction quickening slightly since July. Overall, composite employment fell for the third month in a row and at a modest pace."
• India Composite PMI firmed up to 105.2 from 104.0 in July, marking improved growth outlook for the economy and breaking, once again, trend with the rest of the BRICs. Per Markit: "India’s private sector economy improved further in August. The seasonally adjusted Nikkei India Composite PMI Output Index rose to a five-month high… The uptick in growth was boosted by a quicker expansion of services activity, as the increase in manufacturing production softened in August. …New business across the private sector as a whole expanded at a moderate pace that was the quickest since March."

SUMMARY: As charts above show, BRICs as a block are now exerting negative drag on the global economy. This is extremely worrying especially as the core drivers for this weakness are now China and Brazil, opposed to Russia. While Russian economy remains in a recession, overall, it is responsible for lesser share of negative momentum in the BRICs index than the other two troubled economies since around the start of 2Q 2015.

3/9/15: BRIC Servies PMI: August

BRIC Services PMIs are out, so here is the summary of latest changes:

• Brazil Services PMI rose to 44.8 in August from July's 39.1. This marks seventh consecutive month of Services reading below 50.0. July fire was horrific and cam on top of abysmal 39.9 reading in June. August reading is still below 50, but is now the second highest in 7 months. In 12 months from August 2014, the index posted above 50 reading in only two months. This confirms deep-running recessionary dynamic in Brazil's economy.
• Russia Services PMI came in at 49.1, below 50.0 and down on 51.6 in July. Details covered here. As noted, this is a disappointing reading signalling weak contraction in the Services side of the Russian economy, compounding sharper contraction in Manufacturing.
• China Services PMI posted 51.5 in August, down from 53.8 in July. This index has never reached below 50.0 in its history, so 51.5 is a weak reading overall. In fact, this is the slowest pace of expansion signalled by the Services sector since July 2014. Taken together with rather sharp ongoing contraction in Manufacturing, the Services PMI for China suggests that current rate of economic growth in the country is well below the target of 7% annual rate of growth targeted by the Chinese Government. Most likely, stripping out financials (supported by the Government aggressive intervention in the stock markets in recent months), China's Services PMI would be in much worse shape.
• India Services PMI came in at 51.8 - signalling acceleration in growth from 50.8 in July. This marks second consecutive month of above 50.0 readings for this index. 

Some Markit comments on the above:

For China: "The Caixin China General Services Business Activity Index …signalled the slowest increase in activity in the current 13-month sequence of expansion. Total new order growth at service sector companies also weakened in August, with the latest increase in new business the slowest seen in just over a year. According to anecdotal evidence, relatively subdued market conditions had dampened client demand in the latest survey period."

For India: "The seasonally adjusted Nikkei Services Business Activity Index [pointed] to a faster, although modest, expansion in output. Activity growth was recorded in three of the six monitored categories, namely, Hotels & Restaurants, Post & Telecommunication and ‘Other Services’. Leading services activity to increase was a further rise in incoming new work. According to panellists, higher demand coupled with capacity improvements and increased marketing all had contributed to the latest expansion in new business. Despite quickening since July, the rate of growth was moderate. While manufacturing new work rose at a weaker pace than in July, growth nevertheless outpaced that seen at their services counterparts."

CONCLUSION: BRIC economies are suffering from the twin effects on internal structural weaknesses (domestic markets and policies) and from lack of external demand growth. These leading emerging market economies are now solidly in a recessionary dynamic (Brazil and Russia), and near hard landing territory (China). India continues to break trend with the rest of BRICs, although this remains to be seen how long its economy can sustain this decoupling. 

5/8/15: BRIC Composite PMIs: July 2015

I covered BRIC economies' Manufacturing PMIs for July here: http://trueeconomics.blogspot.ie/2015/08/4815-bric-manufacturing-pmis-july-2015.html.

Now, let's take a look at Services PMIs and Composite.

• Brazil Services PMI fell from an extremely poor 39.9 in June 2015 to an abysmal 39.1 in July, reaching a joint historical low (total history for the series spans 101 months). July reading was so poor, 3mo average through last month fell to 40.5 against 3mo average through April 2015 at 48.3 and 3mo average through July 2014 at 50.7.
• Per Markit: "The downturn remained widespread across the services categories covered by the survey, with all of the sub-sectors registering substantial falls in business activity. The steepest contraction was at Hotels & Restaurants, followed by Transport & Storage. The level of new business in the service economy decreased for the fifth straight month in July. The pace of reduction was slightly faster than in the prior month, but nonetheless still less severe than in May (when new business fell at the quickest pace since April 2009). 
• Brazil's woeful Services PMI was compounded by a drop in Manufacturing (see summary of both below), driving official Brazil Composite PMI deep into contraction territory at 40.8 against already extremely low 41.0 in June. Overall, Composite index has hit the lowest point since March 2009.
• Overall: there is absolutely no doubt that both Services and Manufacturing are currently in a recession, with below 50 readings in both sectors present since March 2015

• Russia Services PMI strengthened from 49.5 in June to 51/6 in July marking the return to growth in the sector. On a 3mo average basis, July 2015 reading was at 51.3, well ahead of 3mo average through April 2015 (46) and 3mo average reading through July 2014 (48.5). 
• However, Russian Manufacturing PMI (see separate coverage here: http://trueeconomics.blogspot.ie/2015/08/3815-russia-manufacturing-pmi-july-2015.html).
• The respective Russian Composite Output Index improved to 50.9 in July, up from 49.5 in the preceding month. Per Markit: "Supporting the rise in overall activity for the service sector was a fourth consecutive month of increasing volumes of incoming new business. Moreover, the rate of growth accelerated to the highest recorded for twenty months amid reports that a more positive economic climate was driving demand for services upwards."
• More details on both Russia Composite PMI and Services PMI here: http://trueeconomics.blogspot.ie/2015/08/5815-russian-services-composite-pmis.html.
• Overall: these are some tentative early-stage signs of economic stabilisation and possibly recovery. Too early to call a new trend, however, and any talk of real recovery will require sustained rise in Manufacturing PMI above 51-51.5 mark.

• China Services PMI posted yet another above 50 reading (the Index never once dipped below 50.0 mark) rising strongly from 51.8 in June to 53.8 in July. This is the strongest reading in the Index since August 2014 and brings 3mo average through July 2015 to 53.0, up on 52.4 3mo average through April 2014 and on 51.3 3mo average through July 2014.
• Sub-50 reading in Manufacturing PMI reflective of further worsening in manufacturing downturn in the economy (ongoing since November 2014 with a brief interruption in February 2015) meant that China Composite PMI posted "only fractionally above the neutral 50.0 mark at 50.2, down from 50.6 in June, and pointed to the weakest rate of expansion in 14 months."
• Overall: China remains on slower growth path with Manufacturing under significant pressure. This trend is linked to the fortunes of global trade flows (more so than Services) and to weakening investment outlook for Chinese firms.

• India Services PMI rose to 50.8 in July, marking a very shallow recovery in the sector and breaking two months streak of sub-50 readings. July reading was up on 47.7 in June and on a 3mo average basis, figures through July 2015 are at 49.4 - signalling weak contraction against 3mo average through April 2015 at 53.1 and 3mo average through July 2014 at 52.3.
• Strong Manufacturing performance in PMI terms and weak, but above 50 reading in Services provided upside support for the Composite PMI. Per Markit: "After having fallen in the previous month, output across the combined manufacturing and service sectors in India rose during July. The seasonally adjusted Nikkei India Composite PMI Output Index climbed to 52.0 from 49.2 in June to signal a modest increase in activity. Growth has now been recorded in 14 of the past 15 months. The return to expansion was helped by a first rise in services activity in three months and an acceleration in the rate of manufacturing production growth."
• Overall: India regained its strong performance dynamic in July across both sectors, with relatively weaker performance in Services. Indian economy currently leads the BRIC group in terms of growth momentum as signalled by PMIs.

Summary of changes across both Manufacturing and Services PMIs is provided below:

And chart for Services PMIs illustrates: 

Overall, BRIC activity as contributor to global growth has improved, remains weak. In June, the BRIC group of economies was contracting and exerting downward pressure on global growth. However, in July, they made a positive contribution, albeit extremely shallow.

In recent months, it has become customary for BRIC economies analysts to suggest that Russia is the weakest component to BRIC activity. However, while this assertion was true through 1Q 2015, it is no longer holding since then:

This, however, is of little consolation to an economy in a recession.