Category Archives: BRIC Composite PMI

6/6/21: BRIC PMIs for May: Volatile Growth and Surging Inflationary Pressures

 

BRIC PMIs for May 2021 show uneven pace of recovery within the group of the largest Merging and Middle Income economies and a uniform evidence of pressure on inflation side.

  • Brazil: Manufacturing PMI is currently running at 53.0 for 2Q 2021 for two months into the quarter, down from 1Q 2021 reading of 55.9. This marks second consecutive quarter of decreases in Manufacturing sector activity in Brazil. Brazil Services PMI is currently running at a deeper recessionary reading of 45.6, compared to 1Q 2021 at 46.1. As the result, Brazil's Composite PMI fell from the already recessionary reading of 47.9 in 1Q 2021 to 46.9 in 2Q 2021 to-date. Prices, meanwhile continued to show severe inflation pressures. Per Markit: "The rate of input cost inflation across the private sector softened further from March's record high, but remained one of the strongest since composite data became available in early-2007. ... In contrast to the trend for input costs, there was a quicker increase in aggregate selling prices. In fact, the rate of charge inflation was the strongest seen in the series history. Manufacturers again saw the sharper rise, despite inflation here softening during May."
  • Russia: Manufacturing PMI remains at the same level through the first two months of 2Q 2021 (51.2) as in 1Q 2021, implying steady, but relatively weak growth. That said, monthly numbers have been more volatile in 2Q 2021 so far (range of 50.4 to 51.9) compared to 1Q 2021 (range of 50.9 to 51.5). Russia Services PMI rose to a robust reading of 57.5 in May, pushing the quarterly average to 56.4 2Q 2021 so far, up on 1Q 2021 average of 53.6. All in, Russian PMIs for both sectors are now in the second consecutive > 50.0 readings territory - a good signal. Composite PMI rose to 55.1 in 2Q 2021 to-date, compared to 53.2 in 1Q 2021. This marks the highest composite PMI for any BRIC economy for 2Q 2021 to-date. Just as with global and rest-of-BRICs cases, Russian inflationary pressures were running high in May. per Markit: "Price pressures remained high in May, with rates of private sector cost and charge inflation quickening notably. Sharper supplier price hikes and greater fuel costs reportedly spurred increases in cost burdens."
  • India: Manufacturing PMI slipped from 56.9 in 1Q 2021 to 53.2 in 2Q 2021 to-date, marking the second consecutive quarter of declining PMIs. May 2021 reading was at 50.8, signaling, statistically, zero growth conditions in the sector. Services PMI fell below 50.0 mark in May reaching 46.4, with 2Q 2021 reading so far standing at 50.2, down from 54.2 in 1Q 2021. Statistically, the 2Q 2021 reading to-date implies zero growth in the Services sector. As the result, India's Composite PMI fell to 51.8 in 2Q 2021 to-date, down from 56.4 recorded in 4Q 2020 and 1Q 2021. With domestic demand slipping, inflationary pressures remained high, but did not accelerate. per Markit: "The rate of input cost inflation at the composite level eased to a four-month low in May, with slower increases noted at manufacturing firms and their services counterparts. Aggregate selling prices rose moderately and at a rate that was similar to April's. The quicker rate of charge inflation was seen in the manufacturing industry."
  • China: China Manufacturing PMI remains relatively robust in 2Q 2021 so far (52.0) compared to 1Q 2021 (51.0), with levels of activity somewhat higher than historical average (50.7). Meanwhile, activity in the Services sector has accelerated, with Services PMI rising from 52.6 in 1Q 2021 to 55.7 in 2Q 2021. The latest Composite PMI reading remains robust at 54.3 for the first two months of 2Q 2021, compared to 52.3 in 1Q 2021, and above, statistically, historical average of 52.6. On inflation, Markit note states: "Both the gauges for input costs and output prices rose higher into expansionary range, indicating tremendous inflationary pressure. ...  "Policymakers mentioned rising commodity prices at the State Council executive meetings on May 12 and May 19. They issued instructions about stabilizing commodity supplies and prices. ... Inflationary pressure would limit the room for monetary policy maneuvering, which could hinder the economic recovery. Some enterprises began to hoard goods in response to rising raw material prices, while others suffered raw material shortages. Supply chains were also significantly affected.""


Per Markit, globally: "Higher employment also reflected companies' efforts to combat rising capacity pressures. Backlogs of work expanded at the fastest rate in 17 years, with stronger increases at both manufacturers and service providers. Demand outstripping supply also led to increased price inflation. Input costs rose to the greatest extent since August 2008 and output charges at the quickest rate on record (since at least October 2009)."

Two charts to illustrate the above trends:




13/5/21: BRIC Composite PMIs April 2021: Recovery Fragile, Inflation Heating Up

April PMIs for BRIC economies show continued strengthening in the recovery in China and Russia, moderation in the recovery momentum in India and deepening collapse in the recovery in Brazil.

Since we are into the first month of the new quarter, there is not enough data to go about to meaningfully analyze quarterly dynamics. Hence, I am only looking at Composite PMIs:


PMIs in April run stronger, compared to 1Q 2021 averages for Russia (Services only), and China (Services and Manufacturing), while Brazil and India recorded deteriorating PMIs in both Manufacturing and Services, and Russia posted weaker Manufacturing PMI.

BRIC as a group underperformed Global PMIs in April in both Services and Manufacturing, although BRIC Services PMI in April was running ahead of Services PMI for 1Q 2021, and there was virtually no change in Manufacturing PMI for BRIC group in April compared to 1Q 2021 average. 

Global Composite PMI in April was 56.3, which is much higher than same period Composite PMIs for Brazil (44.5), Russia (54.0), China (54.7) and India (55.4).

Notable price pressures were marked in:

  • China: "At the same time, inflationary pressures remained strong, with input cost inflation hitting its highest since January 2017, while prices charges rose solidly".
  • India: "Supply-chain constraints and a lack of available materials placed further upward pressure on inflation. Input prices facing private sector companies rose at the sharpest pace in close to nine years. The quicker increase was seen among goods producers. Prices charged by private sector firms increased at the fastest pace since last November, but the overall rate of inflation was modest and much weaker than that seen for input costs."
  • Russia: "The rate of input cost inflation slowed in April to the softest for three months. That said, firms continued to pass on higher costs to their clients, as charges rose at the fastest pace since January 2019".
  • Brazil: "Meanwhile, input costs continued to increase sharply. The rate of inflation was the second-fastest since composite data became available in March 2007, just behind that seen in the previous month. Goods producers noted a stronger rise than service providers for the fifteenth straight month. Prices charged for Brazilian goods and services rose further, stretching the current sequence of inflation to nine months. The upturn was sharp and the fastest in the series history. The acceleration reflected a quicker increase in the manufacturing industry".

8/4/21: BRIC Composite PMIs 1Q 2021: A Mixed Bag for Recovery Votes

 

I covered BRIC Manufacturing PMIs for 1Q 2021 (https://trueeconomics.blogspot.com/2021/04/5421-brics-manufacturing-pmis-1q-2021.html) and BRIC Services PMIs (https://trueeconomics.blogspot.com/2021/04/8421-bric-services-pmi-1q-2021-slowing.html) in the two posts earlier.  Now, the round up analysis based on Composite PMIs:

  • Brazil Composite PMI fell from 54.4 in 4Q 2020 to 52.1 in 1Q 2021, marking a slowdown in growth conditions in the economy. Quarterly activity in 1Q 2021 is still ahead of where it was in 3Q 2020 (51.6) and marks third consecutive quarter of growth. But, for the first time during this recovery period, Brazil Composite PMI is now below Global Composite PMI (53.43 in 1Q 2021).
  • Russia Composite PMI increased from recessionary 47.7 in 4Q 2020 to still negative-growth (albeit statistically, indistinguishable from zero growth) 49.5 in 1Q 2021. Russian economy has now posted four quarters of contracting economic growth PMIs out of five quarters of the pandemic. Needless to say, Russian Composite PMIs are remaining well below Global Composite PMI as the did in 4Q 2020 as well.
  • India Composite PMI slipped from 56.4 in 4Q 2020 to 55.7 in 1Q 2021 signaling slower, but still robust growth in the economy. India outperformed Global Composite PMIs in 4Q 2020 and 1Q 2021, the only two quarters of > 50 readings in India's case.
  • China Composite PMI fell from 56.3 in 4Q 2020 to still robust 55.2 in 1Q 2021. Thus, China, like India, managed to outperform Global Composite PMIs in both of the last two quarters. Unlike India, China also beat Global Composite PMIs in 1Q and 2Q 2020 as well. Since Chinese economy was the only BRIC economy to regain its 2019 levels of activity back in 3Q 2020, the last two quarters of PMIs suggest strong rebound in the world's largest economy (or second largest one, depending on how one counts economic output).


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). 

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.