Category Archives: Global Manufacturing PMI

4/3/19: BRIC Manufacturing PMI: January-February Trend

In January-February 2019, Global manufacturing PMI sunk to its lowest reading since 2Q 2016 averaging 50.7 over the first two months of the year. With it, the slowdown has also been impacting the BRIC economies, overall BRIC Manufacturing PMIs average 41.2 in 4Q 2018 based on each country share of the global GDP for 2018, below 51.83 average for Global Manufacturing PMI over the same period. In the first two months of 2019, BRIC Manufacturing PMI was around 50.8, statistically indistinguishable from the 50.7 Global PMI average.

As the chart above clearly indicates, poor BRIC performance was driven by a contraction-territory reading for China (49.1 in January-February 2019 as opposed to stagnation-signalling 50.0 in 4Q 2018), and Russia (50.5 for the first two months of 2019, against 4Q 2018 average of 51.9). In contrast, both Brazil and India outperformed BRIC and Global PMI readings. Brazil's Manufacturing PMI averaged 53.1 in the first two months of 2019 against 52.1 in 4Q 2018, while India's PMI rose to 54.1 in January-February this year against 53.4 in 4Q 2018.

All in, Manufacturing sector leading indicator suggests a major slowdown in the Global growth momentum, and some spillover of this slowdown to Russia and China.  Brazil's robust reading so far marks the fastest pace of expansion since 1Q 2010, on foot of a recovery from a very long and painful recession. India's reading is the highest since 2Q 2012. If confirmed over March and over Services PMI, this implies a major diversion of growth momentum within the BRIC group.

3/10/18: Global PMIs tanked in 3Q 2018

While Markit continue to publish Services and Composite PMIs for BRIC economies, here is a quick update on Global PMIs for 3Q 2018 which are now out:

  • Global Manufacturing PMI averaged 52.5 in 3Q 2018, down from 53.2 in 2Q 2018. This is the lowest reading for the index in 8 quarters, signalling slowest growth in global manufacturing sector since 3Q 2016. It also marks the second consecutive quarter of declining Global Manufacturing PMI.
  • Global Services PMI averaged 53.5 in 3Q 2018, the lowest reading in 7 consecutive quarters, matching the lowest point in 8 consecutive quarters. This marked the first quarter of declines in Services sector activity, and the drop was sharp: down from 54.2 in 2Q 2018.
  • Global Composite PMI averaged 53.3 in 3Q 2018, down from 54.0 in 2Q 2018 and 54.2 in 1Q 2018, marking the lowest reading in 8 consecutive quarters. The slowdown in the overall global economic indictor has also been sharp in 3Q 2018 and most of this slowdown took place in August and September.

Overall, these are not great signs for the global economy. 

For BRIC Manufacturing PMIs analysis for 3Q 2018, see here: BRIC Services PMIs and BRIC Composite PMIs analysis is to follow, so stay tuned.

1/10/18: BRIC Manufacturing PMI dips down in 3Q 2018

BRIC Manufacturing PMIs turned south in 3Q 2018 in line with Global trend, but leading that trend to the downside. Per latest data through September 2018:

Russia Manufacturing PMI averaged miserly 49.0 in 3Q 2018, down from anaemic 50.2 in 2Q 2018. This was the lowest quarterly reading since 3Q 2015 when the Russian economy was in an official recession. Russia is the only BRIC economy nominally in contraction territory, when it comes to PMIs-signalled manufacturing sector activity, and 49.0 is statistically close to being sub-50 reading as well.

Brazil’s Manufacturing PMI remained broadly unchanged on 2Q 2018 reading of 50.9 at 50.8 in 3Q 2018. Although notionally above 50.0 mark, statistically, the reading was not significantly different from zero growth signal of 50.0. This means that both Russian and Brazilian economies registered deteriorating PMIs over two consecutive quarters in the case of Brazil and 4 quarters in the case of Russia.

China Manufacturing PMI was at disappointing 50.5 in 3Q 2018, down from a weak 51.1 reading in 2Q 2018. This marks the worst reading in China PMI in five quarters. As with Brazil, China’s Manufacturing PMI for 3Q 2018 was not statistically distinct from 50.0.

India Manufacturing PMI was the only one that remained statistically in expansion territory at 52.1 in 3Q 2018, basically unchanged on 52.0 in 2Q 2018 and barely up on 51.8 in 1Q 2018.

Meanwhile, Global Manufacturing PMI averaged 52.5 in 3Q 2018, down from 53.2 in 2Q 2018 and 54.0 in 4Q 2017 and 1Q 2017. All in, Global PMI has finished 3Q 2018 at the lowest level in 8 consecutive quarters.

3/2/17: Global Composite PMI signals improving growth in January

Over the last four months, I have been suggesting that markets participants pay close attention to Global PMIs, and in particular to the emerging signals of firming global economic growth. January 2017 figures did not disappoint on this front.

I covered Manufacturing PMI yesterday in a post available here.

Today, we got the reading for Services and Composite data. Both printed 53.9, which marks statistically significant expansion and a rise on 4Q 2016 figures, suggesting that global growth is still accelerating. Crucially, new orders are continuing to rise as well.

Per Markit: “The J.P.Morgan Global All-Industry Output Index… posted 53.9 in January, its best reading since March 2015 and up from 53.6 in December. The index has now signalled expansion for 52 consecutive months.”

One caveat is that China data is not included in both Manufacturing and Services PMI readings. But, As shown here: China Manufacturing PMI posted lacklustre performance in January, barely staying above 50.0 level.

Again, quitting Markit, “growth of global service sector business activity improved to a 17-month high in January, offsetting a minor easing in the rate of expansion of manufacturing production.”

Geographically, “the acceleration in the rate of increase in all-industry output was led by the US and Russia. US growth was the sharpest since November 2015, while Russia registered its quickest expansion of economic activity for over eight-and-a-half years. The euro area saw output growth steady at December’s 67-month record, while rates of increase slowed in Japan and the UK. India and Brazil both saw all-industry activity decline at the start of 2017.”

“Global employment rose again in January, with the pace of job creation matching December’s 19-month record.” Again, geographically, employment “…increased in the US, the eurozone, Japan, the UK, Russia and India, but fell further in Brazil.”

Crucially for monetary policy forward, inflation ticked up as well.

Overall, Global Manufacturing PMI remained at rather robust levels of 52.7 in January 2017, comparable to those attained at the end of 4Q 2016 and well above the 51.4 average for the last 4 years. Global Services PMI ended January 2017 at 53.9, which is above already robust 53.5 recorded in 4Q 2016 and above the 4-year average of 53.4. At 53.9, Global Composite PMI is slightly ahead of 4Q 2016 levels (53.6) and is well above 53.0 average for the last 5 years. Thus, across both sectors, the global economic expansion appears to be improving to the upside at the start of 1Q 2017.

Analysis of BRIC Services and Composite PMIs coming up as soon as we have China data.