Category Archives: Services

14/10/20: BRIC: Services PMIs Q3 results

 

BRIC Manufacturing has rebounded strongly from thee pandemic lows, as covered in this post here: https://trueeconomics.blogspot.com/2020/10/141020-bric-manufacturing-pmis-q3.html. Services PMI for the BRIC economies signal similar, albeit weaker rebound in July-September:


Brazil Services PMI stayed in the recession territory in 3Q 2020, with index reading coming in at 47.5, up on 30.3 in 2Q 2020, but still marking a third consecutive quarter of sub-50 readings. Put simply, unlike manufacturing that is showing rather incredible signs of the recovery, Brazil's services sectors continue to show ongoing contraction, building on 6 consecutive months of contracting activity through August 2020. September monthly reading at 50.4 is statistically indistinguishable from zero growth line of 50.0. In summary, Brazil's services sector is not in a recovery so far.

Russia Services PMI posted very strong recovery signals in 3Q 2020, although September reading slipped to 53.7 (fast growth) from blistering 58.5 and 58.2 in July and August, respectively. 3Q 2020 Russia Services PMI was at 56.8 marking a sharp turnaround from 36.0 in 2Q 2020. This is the fastest pace of quarterly expansion since 1Q 2017.

India Services PMI remains in contraction, with 3Q 2020 reading of 41.9, an improvement on sharper rates of deterioration in 2Q 2020 at 17.2. September marked seventh consecutive month of sub-50 readings in Services sector in India.

China Services PMI came in at 54.3 in 3Q 2020, up on 52.6 in 2Q 2020, marking second consecutive quarter of recovery from the pandemic lows of 1Q 2020 when the index fell to 40.4. 

Overall, BRIC Services Activity Index - an index compiled by me based on GDP shares and Markit monthly PMI data - rose from 40.4 in 2Q 2020 to 51.0 in 3Q 2020. Given the nature of PMIs as signals of monthly changes in activity, 3Q 2020 reading is consistent with the BRIC block services sectors recovering only partially from the pandemic lows. BRIC Services Activity Index ended 3Q 2020 at the levels slightly below the Global Services PMI which stood at 51.4. Global services sectors are also showing more rapid rate of quarterly recovery, rising from 35.6 in 2Q 2020 to 51.4 in 3Q 2020.


8/92020: BRIC: Composite economic activity indicators

 Based on Markit's Composite PMIs, here are the BRIC economies composite economic activity indicators for 3Q 2020 to-date (July-August). 

Please, note: Manufacturing PMIs for BRIC economies were covered here: https://trueeconomics.blogspot.com/2020/09/8920-bric-manufacturing-pmis.html, and Services PMIs were covered here: https://trueeconomics.blogspot.com/2020/09/8920-bric-services-pmis.html. 


  • Brazil Composite PMI for 3Q 2020 currently sits at 50.6, barely above the zero-growth line of 50.0 in statistical terms. This represents a major improvement in growth momentum compared to an outright depressionary reading of 31.8 in 2Q 2020 and a swing of 18.8 points - a respectable reversal of momentum, although not a signal of an appreciable recovery from the recession.
  • Russia Composite PMI for 3Q 2020 is at blistering 57.1, suggesting a genuine recovery, albeit one-sided, driven by services sector rebound. COVID19 pandemic low was recorded in 2Q 2020 at abysmal 32.6, implying latest swing from the trough of massive 24.5 points. This does appear to be consistent with a robust recovery momentum, albeit with some caveats. This is the highest reading for any quarter since 3Q 2006 and the third highest reading on record.
  • China Composite PMI is at 54.8 so far through 3Q 2020, an improvement on growth-signalling 52.6 reading in 2Q 2020 and up respectable 12.8 points on recession trough in 1Q 2020.
  • India Composite PMI managed to rocket to a still-recessionary 41.6 in 3Q 2020 to-date, up on the recession trough of 19.9 in 2Q 2020 - a swing of 21.7 points. Still, the economy remains in a pronounced recession and 3Q 2020 so far is showing signs of exacerbated contraction building on 2Q 2020 collapse in activity.
For BRIC economies as a whole, the chart next shows GDP-weighted and GDP-shares weighted BRIC Indices of activity, compared to Global Composite PMIs:


Overall, BRIC economies growth momentum is still subdued and largely performing worse than the Global Composite PMI indicator.

8/9/20: BRIC: Services PMIs

Services sector activity as reflected by PMIs from the BRIC economies is now available for August, so here are the top numbers: 

In terms of actual readings, and do recall, quarterly PMIs referenced above are averages over three months period, so 3Q 2020 data is only covering July-August 2020.
  • Brazil Services PMI was nowhere near the insane reading posted by the country Manufacturing PMI (see post here: https://trueeconomics.blogspot.com/2020/09/8920-bric-manufacturing-pmis.html). Services index came in at 46.0 for the period of July-August (3Q 2020 to-date), up on disastrously low 30.3 in 2Q 2020, but still well below 50.0 line of zero growth. Reading PMIs, this means that the sector activity continued to contract in 3Q 2020 so far, on top of the already sharp contraction experienced in 1Q 2020 and 2Q 2020.
  • Having set no records in Manufacturing, Russia Services PMI came out with a massive and seriously surprising print to the upside in August. As the result, 3Q 2020 to-date Services PMI rose to 58.4 for the highest reading since 2Q 2009. As massive as the print is, it is pretty 'normal' for volatile Russian services data. Still, the recovery it signals is sharp, as 2Q 2020 COVID19 trough was at a misery-inducing 32.0. The implied trough-to-peak swing is jaw-dropping 26.4 points.
  • China Services PMI rose in the first two months of 3Q 2020 to 54.1 from already expansionary 52.6 in 2Q 2020. Trough-to-peak COVID19 swing is now at 13.7 points, and the latest reading is the highest since 4Q 2010, when the index stood at 54.2.
  • India Services sectors are still in sharp contraction. Recall: in 2Q 2020, India Services PMI crashed, smashed, collapsed, melted down, or whatever else you might call, falling from 54.1 in 1Q 2020 to 17.2 in 2Q 2020, the lowest reading for any BRIC economy in any sector at any time. So far, in 3Q 2020, the index is running at 38.0, which implies that India's services sectors continue to contract from already reduced activity in prior quarter. In the light of this super-sharp recessionary dynamic, it is impossible to reconcile Manufacturing sector PMI and Services sector PMI in this economy.

Overall, BRIC Services Activity Index - a measure I compute using a range of data inputs, including Markit's PMIs - came in 49.9 in 3Q 2020 (to-date), an improvement on 2Q 2020 reading of 40.4 and above 1Q reading of 44.9. Nonetheless, across the four largest EM economies, Services activity continues to contract for the third quarter in a row, nominally, and it is standing still statistically. In this, BRIC economies are distinct from the Global Services PMI indicator, which rose from 35.6 in 2Q 2020 to 51.3 in 3Q 2020 (to-date). 


Stay tuned for BRIC Composite PMIs next.

6/7/2020: Irish Services Sector Activity Index: May 2020


COVID19 impact on services sectors activity in Ireland, data through May 2020:


Huge adverse impact on the economy. Note precautionary purchasing effect on Retail sales in the difference between Wholesale & Retail index and Wholesale sub-index. And some recovery in May, compared to 1Q 2020. But overall, conditions are still dire. And we are not yet seeing the effects of consumer behavior changes on post-restrictions demand. That is still coming...

Forward industry view (ex-behavioral aspects) for June 2020, via Purchasing Managers Index: