Category Archives: Russian PMI

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.

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

  • "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.

  • 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.

  • 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.

1/6/15: Russian Manufacturing PMI: May 2015

Russia Manufacturing PMI came in at disappointing 47.6 in May 2015, compared to 48.9 in April. This reverses slight improvement in April compared to March and puts PMI at the level matching the lowest reading since June 2009, achieved back in January 2015.

Weak conditions signal reversal of the slightly improving trends in the economy over 1Q 2015 (see following post on this).  We are now in 6th consecutive month of sub-50 PMI readings for the sector, and 24 months average PMI for Russian Manufacturing stands at 49.4.

6/4/15: BRIC Services PMIs & Overall Activity in Q1 2015

BRIC Services PMIs (published by Markit) are finally out, with the last two countries instalments today, so time to look at the Q1 2015 data. And from the top level view, things are not encouraging:

  • Brazil Services PMI slipped from 52.3 in February (a 14-months high that was a huge upside surprise) to a 70-months low of 47.9 in March - a massive fall. On a quarterly basis, things are not as bad, but that is all down to February reading. 3mo average for Q1 is at 49.5 - still contractionary/zero growth, compared to 49.3 Q4 1024 average and against weak growth recorded in Q1 2014 (50.5 average). In last 8 months, Brazil managed to post only two months of Services PMIs above 50, with only one month reading being statistically significantly above 50.0. In short, we now have a sign of deepening slowdown in the economy, based on both Manufacturing and Services surveys.
  • Russia Services PMI was predictably weak at 46.1 in March, although a gain on totally abysmal 41.3 reading in February. 3mo average through Q1 2015 is at 43.8 and this is well below already contractionary 47.1 average through Q4 2-14. Q1 2014 registered a weak contraction/static growth of 49.6. March reading was the strongest in 5 months, but overall Services side of the Russian economy has posted below 50 survey readings continuously over 6 months now. This, coupled with another (4th monthly) below 50 reading in Manufacturing suggests that there is an ongoing significant recession in the economy and that this has accelerated in Q1 2015 compared to Q4 2014.
  • China Services PMI remained in relatively moderate growth territory in March (at 52.3 against 52.0 in February) and 3mo average for Q1 2015 is at 52.0, weaker than Q4 2014 average of 53.2, but up on Q1 2014 average of 51.2. China never posted below 50 PMI in Services before , so we are left tracking relative weaknesses in positive growth signals here. Weak improvement in Services survey is offset, in China's case, by strong deterioration in Manufacturing index which fell below 50 in March.
  • India Services PMI was somewhat weaker in March 2015 at 53.0 compared to February 53.9 reading. Still, this marks the second highest reading in 9 months. India's Services PMI average for Q1 2015 is at 53.1 - a major improvement on 51.3 average through Q4 2014 and a big gain y/y - in Q1 2014, Services PMI was averaging only 48.2. March marked 11th month of above 50 readings for Indian Services surveys. India is the only BRIC country that managed to post m/m growth (above 50 readings) across both sectors: Manufacturing and Services.

Chart below shows Services surveys dynamics:

Table below summarises changes in Manufacturing and Services PMIs:

Pooling together Services and Manufacturing surveys data, chart below shows the overall BRIC trend in growth. March came in with a slowdown of overall economic activity across the block of the largest emerging markets economies and this slowdown took place in the already weak growth environment. While the series remain on an upward trend established from the local low attained in July 2013, this trend is no longer convincing and since June 2014, there has been a pronounced downward sub-trend. This does not bode well for the global economy.

3/4/15: Russian Services & Composite PMIs: Signal of Slower Contraction in Q1 15

Russian Services PMI (Markit and HSBC) came in with a slight improvement in March, rising to 46.1 from 41.3 in February and signalling slower rate of contraction. Services PMI is now reading sub-50 for the 6th month in a row, with 3mo average for Q1 2015 at abysmal 43.8 against Q4 2014 average of 45.9 and Q1 2014 reading of 49.6.

Per Markit release: "Russian service providers signalled some confidence that the recent downturn will prove transitory, with over a third of panellists forecasting some growth of activity from present levels over the next 12 months." Nonetheless, forward expectations are not translating in an improvement in operating conditions today, so "…service sector firms continued to shed staff during March. Latest data showed employment falling for a thirteenth successive month, and again at a marked pace. Despite a reduction in capacity, service providers had sufficient spare resources… Manufacturers also signalled spare capacity during March, with both employment and outstanding business being cut, albeit at slower rates."

As the result of improved (slower) rate of decline in Services activity, Russian Composite PMI also moderated the rate of decline, rising from 44.7 in February to 46.8 in March. As with Services sector, Composite PMI is now running below 50.0 for the sixth month in a row. 3mo average through Q1 2015 is at 45.7, which is much worse than already poor 48.0 average for Q4 2014 and 49.2 average for Q1 2014.

As chart above confirms, Russian economy is in a state of 'getting worse  more slowly' rather than in a state of 'getting better'. Positive outlook over the next 12 months (see details here: remains subdued, with Q1 2015 improvement on Q4 2014 failing to restore expectations to 2012-2013 average, let alone to the recovery-consistent 2010-2011 averages.