Category Archives: #GlobalGrowth

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

 

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


  • Brazil Manufacturing PMI fell from 64.1 in 4Q 2020 to 55.9 in 1Q 2021. All three months of 1Q 2021 came in sub-60 (all three months of 4Q 2020 were above 60) and March 2021 was the lowest monthly reading since June 2020.
  • Russia Manufacturing PMI slipped from 51.5 in February to 51.1 in March. On quarterly basis, Russia Manufacturing PMI actually managed to rise from a recessionary reading of 47.6 in 4Q 2020 to a weak recovery reading of 51.2 in 1Q 2021. This is the highest reading since 1Q 2019 and the first above-50 reading since the end of 2Q 2019. Russia was the only BRIC economy posting increasing PMI in Manufacturing sector in 1Q 2021, and at that, the improvement went to anaemic growth from pretty steep contraction.
  • China Manufacturing PMI disappointed, falling from 53.8 in 4Q 2020 to 51.0 in 1Q 2021. Given structural importance of Chinese manufacturing globally, this implies a further build up in orders backlogs in the global supply chains, signaling more inflationary pressures down the line. On a monthly basis, March 2021 posted fourth consecutive decline in monthly PMIs, with March reading of just 50.6 - statistically, basically indistinguishable from zero growth conditions in the sector.
  • India Manufacturing PMI fell from 57.7 and 57.5 in January and February 2021 to 55.4 in March 2021, marking the slowest monthly rate of growth since August 2020. On a quarterly basis, India Manufacturing PMI fell from a hard-to-believe rate of expansion of 57.2 in 4Q 2020 to still robust growth of 56.9 in 1Q 2021.
Brazil and India were the two BRIC economies that managed to outperform global manufacturing sector growth in 1Q 2021 which came in at 54.1, up on 53.5 in 4Q 2020.

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

6/1/21: BRIC: Composite Economic Indicators: 4Q 2020

Now, Composite PMIs:
  • Brazil Composite PMI rose from 51.6 in 3Q 2020 to 54.4 in 4Q 2020, marking second consecutive quarter of > 50.0 readings. Average 4 quarters PMI stands at 46.2, suggesting that Brazil's economy has not, yet, recovered fully from the Covid19 pandemic impact. Nonetheless, statistically, both 3Q and 4Q readings are signaling economic expansion and 4Q growth in Brazil's economy appears to be faster-paced than global (global composite PMI was at 53.3 in 4Q 2020).
  • Russia Composite PMI is in a contraction territory, with 4Q 2020 reading of 47.7, down from 55.9 in 3Q 2020. Over the course of 2020, Russia Composite PMI averaged 46.0, the second weakest in the BRICs group. At 47.7, 4Q 2020 PMI is exactly in line with 1Q 2020 PMI.
  • India Composite PMI rose from 45.9 in 3Q 2020 to 56.4 in 4Q 2020, signaling rapid bounce back in the economy, that, nonetheless continues to suffer from the pandemic-induced economic crisis. Full year 2020, Composite PMI average is at 44.3, by a distance, the lowest in the BRICs group. 
  • China Composite PMI rose from 54.7 in 3Q 2020 to 56.3 in 4Q 2020, marking third consecutive quarter of economic growth, with full year PMI averaging 51.4, suggesting that the Chinese economy has now recovered fully from the Covid19 pandemic impact. 

Overall, three out of four BRIC economies posted 4Q 2020 Composite PMI above Global Composite PMI: Brazil, India and China, with Russia being the only BRIC economy posting both sub-Global and sub-50 Composite PMI reading at the end of 2020. Only one BRIC economy has, so far, signaled full recovery from the Covid19 crisis shock: China, with all other BRICs still recovering from the pandemic.

Given that both BRIC Manufacturing Sector Activity Index (54.9 in 4Q 2020) and BRIC Services Sector Activity Index (54.8 in 4Q 2020) are above Global Manufacturing (53.5) and Services (52.3) PMIs, BRIC economies as a group have supported global economic growth to the upside in 4Q 2020. In contrast, BRIC Manufacturing Activity Index outperformed Global Manufacturing PMI in 3Q 2020 (53.0 to 51.6), while BRIC Services Activity Index (51.0) underperformed Global Services PMI (51.4). 

6/1/21: BRIC: Services PMIs: 4Q 2020

 

BRIC's manufacturing PMIs for 4Q 2020 were covered here: https://trueeconomics.blogspot.com/2021/01/4121-bric-manufacturing-pmis-4q-2020.html. Now, to Services PMIs:

  • Brazil Services PMI rose from 47.5 in 3Q 2020 to 51.4 in 4Q 2020, with aggregate 2020 levels of activity still significantly below 2019 levels. At 51.4, the index is barely statistically above 50.0 (95% confidence bound is 51.3). However, the latest quarterly reading is the first nominally above 50.0 after three consecutive quarters of sub-50 readings. 
  • Russia Services PMI crashed in 4Q 2020 from 56.8 in 3Q to 47.7. Statistically, Russian services sector is contracting and it is contracting rapidly. In the entire 2020, there were three quarters of deeply sub-50 readings against one quarter of above 50.0 expansion. Services sector reading is basically identical to 47.6 recorded in Manufacturing sector, which means that in 4Q 2020 there was no 'comfort zone' in the Russian economy in terms of growth.
  • India Services PMI rose significantly in 4Q 2020 compared to 3Q 2020, from 41.9 to 53.4.  However, this growth is unlikely to bring India's services activity anywhere near pre-Covid19 levels. 
  • China Services PMI rose for the third consecutive quarter in 4Q 2020. In 2Q 2020, China's Services PMI was at 52.6, which increased to 54.3 in 3Q 2020 and to 57.0 in 4Q 2020. Nonetheless, it is still doubtful that Chinese services activities have fully recovered from the pandemic as of the end of 2020.
  • Overall, BRIC Services Activity Index based on PMIs and respective GDP shares in the global economy rose for the second quarter in a row from 51.0 in 3Q 2020 to 54.8 in 4Q 2020. This marks some recovery from the Covid19 pandemic impact, although this recovery remains incomplete. BRICs have - as a group - outperformed Global Services PMI which rose from 51.4 in 3Q 2020 to 52.3 in 4Q 2020.

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

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


On a quarterly basis,

  • Brazil's Manufacturing PMI stood at 64.1 in 4Q 2020, up on 62.6 in 3Q 2020, marking the second highest and the highest reading on record. The contraction in 2Q 2020 (with PMI at 42.0) was sharp, but not as sharp as in 1Q 2009. By these comparatives, GFC-related contraction of 2008-2009 resulted in 4 quarters average reading of 45.1 and saw three consecutive sub-50 readings. The Covid-19 related contraction was stretched only across one quarter, with 4 quarters average of 54.8 in 2020. It is, genuinely, hard to reconcile these numbers with reality of the Covid-19 crisis.
  • Russia Manufacturing PMI slipped to 47.6 in 4Q 2020 from 49.5 in 3Q 2020, marking sixth consecutive quarter of sub-50 readings. Statistically, Russian Manufacturing posted no growth (> 50 readings) in seven consecutive quarters. Over 2020 as a whole, Russian PMIs averaged abysmal 46.0, compared to the GFC and the Great Recession average of 2008-2009 of 44.7.
  • India Manufacturing PMI was at 57.2 in 4Q 2020, up on 51.6 in 3Q 2020, and averaging 49.5 for the year as a whole. During the GFC and the Great Recession period, India's PMI averaged at 51.1. Unlike Brazil, India is yet to recover to pre-Covid-19 levels of activity.
  • China Manufacturing PMI finished 2020 with a reading of 53.9, averaging 51.1 over 2020 as a whole, with overall PMIs performance suggesting that Chinese industrial producers have recovered from the Covid-19 pandemic by the end of 2020. China's Covid-19 experience has been more benign than the country contraction during the GFC and the Great Recession (46.9 average).
Global Manufacturing PMI stood at 53.5 in 4Q 2020 and an average of 49.3 over 2020 as a whole, against BRIC's Manufacturing Index (weighted by relative global GDP shares of the four economies) at 54.9 in 4Q 2020 and 50.5 for 2020 as a whole. In other words, BRICs have supported global growth to the upside during the Covid-19 pandemic. 

7/11/20: BRIC: Composite Economic Indicators for October

 I covered BRIC Manufacturing and Services PMIs for October in two earlier posts (see here https://trueeconomics.blogspot.com/2020/11/51120-bric-services-pmis-october.html), so now, Composite PMIs:



  • Brazil Composite PMI rose to 55.9 in October, compared to 51.6 in 3Q 2020, and currently sits above Global Composite PMI of 53.3. The latest increase in PMI is a robust signal of partial recovery, marking the third consecutive month of > 50.0 readings that followed five consecutive months of contraction. 
  • Russia Composite PMI was the weakest of all BRIC PMIs, falling to 47.1 in October, compared to 55.9 in 3Q 2020, and marking the first sub-50 reading in four months.
  • India Composite PMI was the strongest amongst the BRIC PMIs rising to 58.0 in October against 45.9 in 3Q 2020. Overall, Indian economy is only starting to inch out of the recession that was marked by two consecutive quarters of sharply contractionary PMIs.
  • China Composite PMI posted an increase to 55.7 in October relative to 54.7 in 3Q 2020, marking the start of the third quarter of growth. Overall, the latest reading indicates that Chinese economy has completed its recovery from 1Q 2020 recession.
Overall, BRIC Manufacturing indicator (55.2 in October, compared to 53.0 in 3Q 2020) and Services indicator (54.9 in October, compared to 51.0 in 3Q 2020) have posted better performance than their Global counterparts (53.0 and 52.9, respectively for October). BRIC Manufacturing indicator is now outperforming Global Manufacturing PMI in 8th consecutive quarters, and BRIC Services indicators is running above Global Services PMI for the first time after posting poorer performance in 3Q 2020.