Category Archives: BRIC Services PMIs

3/3/16: BRIC Composite Activity – February


On a cumulative basis (based on Composite PMIs for each country), the BRIC economies as a group have posted a very disappointing performance in February 2016.

Note: for this index, 100.0 is a zero growth marker.

Russian economy Composite Indicator posted a positive upside surprise, rising from a contractionary reading of 96.8 in January to a weakly-expansionary reading of 101.2. 3mo average through February 2016, however, remains below 100 line at 97.9, which is weaker than the 3mo average through November 2015 at 100.3. The details of Russian Manufacturing sector woes are covered here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html, while details of Russian Services and Composite PMIs upside are covered here: http://trueeconomics.blogspot.com/2016/03/3316-russia-services-composite-pmi.html.

As a result, Russian economy acted as a factor pushing up BRIC rates of growth in February:



In contrast with Russia, Chinese Composite Indicator posted a significant contraction in February, falling from 100.2 (zero growth) in January 2016 to 98.8 (weak contraction) in February. On a 3mo average basis, the index is now at 99.3 for the period through February 2016, up marginally on 98.9 reading for the 3months through November 2015, but down on 102.4 reading for the 3mo average through February 2015. Details of Chinese Manufacturing PMIs are covered here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html, while details of Services and Composite PMIs are covered here: http://trueeconomics.blogspot.com/2016/03/3316-china-services-composite-pmi.html.


India’s Composite Indicator fell from 106.6 in January to 102.4 in February, signalling major slowdown in the rate of economic expansion. 3mo average through February 2016 is at 104.1, reflecting robust growth in January, and up on 102.9 3mo average through November 2015, but below 105.3 reading for the 3 months period through February 2015. The weakness in the Indian economic growth is highlighted by comparison to the historical average, which stands at 109.5.

Per Markit: “February data showed that services firms and goods producers alike registered weaker increases in activity. …Falling to a three-month low of 51.4 in February, from 54.3 in January, the seasonally adjusted Nikkei Services Business Activity Index highlighted a softer expansion of output that was only marginal. Where growth was seen, businesses reported higher levels of incoming new work. Although new orders at services firms continued to rise in February, the rate of expansion eased to the weakest since last November as firms reportedly faced strong competition for new work during the month. A quicker increase in order book volumes in the manufacturing economy was insufficient to prevent growth of private sector new orders from easing to a three-month low.”

Conditions in Indian Manufacturing are covered in detail here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html.


Meanwhile, Brazil remained the sickest economy in the BRIC group. Composite Indicator for Brazilian economy sunk to an all-time low of 78.0 from an already recessionary 90.2 in January. As the result, 3mo average for Brazil’s Composite Indicator was at 85.3, down on already extremely weak 86.6 recorded over the 3 months through November 2015 and on 100.1 3mo average through February 2015.

According to Markit: “The downturn in the Brazilian economy took a noticeable turn for the worse in February. Business activity, new orders and employment all fell at, or near to, the fastest rates since the combined manufacturing and service survey began in March 2007. Companies continued to link the adverse operating environment to the ongoing economic, financial and political crises. …Accelerated downturns were registered at manufacturers and service providers alike, although the slump at services companies was especially severe. At 36.9 in February, down from 44.4 in January, the seasonally adjusted Markit Services Business Activity Index posted its lowest reading in the nine-year survey history. Business activity has fallen in each of the past 12 months.”

Brazil’s Manufacturing PMIs were covered in detail here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html.

The summary of changes in both manufacturing and Services sectors across all BRIC economies is here:


Thus, overall, global GDP-weighted BRIC PMI Indicator (computed by me) fell to 98.4 - signalling moderate or mild contraction, down from January reading of 100.6. The Index is now registering sub-100 readings in seven out of nine last months. Worse, BRIC economies last posted a statistically significant reading for growth back in December 2014. On a 3mo basis, 3 months average through February 2016 is at 99.1, which is basically unchanged on 3mo average through November 2015 (99.0) and significantly lower than the 3mo average through January 2015 (101.8). Starting with February 2015, the index has been averaging zero growth.


3/3/16: China Services & Composite PMI: February

China Services PMI fell to 51.2 in February, from January’s six-month high of 52.4, pointing to a much slower rate of growth than the historical series average of 55.0. This comes on foot of Manufacturing PMI registering an outright contraction in February, with the rate of reduction quickening to the steepest since September 2015 (details here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html).

Services PMI 3mo average through February was 51.3, which is basically flat on 51.2 recored in 3mo period through November 2015 and lower than 3mo average through February 2015 (52.4).

Per Markit: “New business growth also slowed across the service sector in February after a solid rise at the start of the year. Furthermore, the latest increase in new orders was weaker than the long-run trend and only modest, with some panellists commenting on relatively subdued client demand. New orders continued to decline at manufacturing companies, and at a slightly quicker rate than at the start of 2016.”


After posting a weak stabilisation in January (at 50.1), the Composite PMI fell to a recessionary level of 49.4 in February, indicating “a renewed fall in total Chinese business activity in February… to signal a marginal rate of contraction.”
 On a 3mo basis, 3mo average through February 2016 was at 49.7, up on 3mo average through November 2015 (49.5) and down on 3mo average through February 2015 (51.2). Again, last six months we saw averages well below historical average (52.9).

Per Markit, “slower increases in both activity and new orders contributed to a weaker expansion of service sector staff numbers in February. Companies that reported higher staff numbers generally mentioned hiring new employees in line with new order growth. Job shedding meanwhile intensified across the manufacturing sector in February, with the latest decline in workforce numbers the sharpest since January 2009. As a result, composite employment fell at a rate that, though modest, was the quickest in six months.”

This clearly signals that troubles are not over for Chinese economy and also suggests that currently projected rates of growth for the world’s second largest economy are way off the mark. Composite PMIs have now posted sub-zero growth signals in five out of the last seven months, with one other month reading being basically consistent with zero growth. On a Composite indicator basis, China is now the second weakest economy in the BRIC group after Brazil, with Russia overtaking itm having posted a composite index reading of 50.6 in February. Over the last 12 months, the same situation prevailed in July-September 2015, and in November 2015 the two countries were tied for the second worst performance reading.

3/3/16: Russia Services & Composite PMI: February


Russian Services PMI came in with surprising upside that bucked the trend in Manufacturing (see links here: http://trueeconomics.blogspot.com/2016/03/2316-bric-manufacturing-pmi-february.html), posting 50.9 reading in February, up from 47.1 in January. On a 3mo basis, however, 3mo average through February remains below 50.0 expansion line at 48.6, which is actually poorer than 49.6 3mo average through November 2015, although much better than 43.7 3mo average through February 2015. In simple terms, February uptick in growth in Services is fragile, unconfirmed, and at this stage does not constitute a robust signal of economic stabilisation.

Per Markit: “Russian service providers reported a slight increase in their business activity levels during February, driven by an expansion in new orders. However, a rise in new projects could not prevent a further sharp deterioration in outstanding business in the sector. Meanwhile, job cuts were evident while price pressures continued to persist.” Still, “the latest increase ends a four month sequence of contraction. Panel members partly linked rising output to an increase in new export orders, the result of a depreciating rouble.”


Net summary is: February reading for Services is encouraging, but is not yet consistent with sustained stabilisation in the economy. 

This has been confirmed by the Russia’s Composite Output Index which also returned to expansion territory in February for the first time in three months. Per Markit: “however at 50.6, up from January’s 48.4, the latest upturn was relatively weak.” On a 3mo basis, the Composite index is still below 50 at 49.0, which is lower than Composite Index average for the 3 months through November 2015 (50.2) although strongly ahead of the abysmal reading for the 3mo period through February 2015 (46.2).

“A higher level of new business was reported by Russian service providers during February, the first increase in five months. However, the pace of
growth was relatively weak. Anecdotal evidence suggested that the expansion reflected the introduction of new products across the sector. Meanwhile, a slight rise in volumes of new orders were reported by manufacturers this month.”

Again, on the net, Composite PMI figures show the return to growth to be unconvincing at this stage. We will need at least 3 consecutive months of above 50 readings to make any serious judgement as to the reversal of recessionary dynamics in Russian economy.

4/2/16: BRIC Composite PMIs: January


In two recent posts, I covered



Now, let’s take a look at the Composite PMIs.

As noted in a more in-depth analysis, here: http://trueeconomics.blogspot.com/2016/02/3216-russian-services-composite-pmi.html, Russia’s Composite Output Index remained in contraction territory in January, posting a reading of 48.4, up on 47.8 in December 2015. The Composite index was helped to the upside by the Manufacturing PMI which was also in a contractionary territory at 49.8, but above the very poor performance levels of the Services PMI. January marked second consecutive month that both Manufacturing and Services PMIs for Russia were below 50.0. Last time that this happened was in December 2014-January 2015 and in February-March 2015 - in other words, at the dire depth of the current crisis. Overall, Russia is once again (second month in a row) ranks as the second lowest BRIC performer in terms of Composite PMI reading, ahead of only a complete basket case of Brazil.

As also noted in an in-depth analysis here: http://trueeconomics.blogspot.com/2016/02/2216-china-services-composite-pmis-for.html due to a substantial improvement in the Services PMI, China’s Composite PMI signalled stabilisation in overall economy-wide business activity in January, with Composite Output Index registering fractionally above the no-change 50.0 value at 50.1, up from 49.4 in December. However, overall, Composite PMI of China has been above 50.0 in only two of the last 6 months and on both occasions, index readings were not statistically distinguishable from 50.0. 3mo average through January for Composite PMI stood at 50.0 (zero growth) against 48.9 average through October 2015 and 51.3 average through January 2015. In other words, the economy, judging by Composite PMI might be closer to stabilising, but growth is not exactly roaring back.


India’s Composite PMI rose from 51.6 in December to an 11-month high of 53.3 in January. Per Markit, “Lifting the index were a rebound in manufacturing production as well as stronger growth of services output.” 3mo average for Composite reading is now a5 51.7, slightly down from 52.3 3mo average through October 2015 and compared to 52.8 3mo average through January 2015. With manufacturing and services order books now in an expansionary territory, “growth of new business across the private sector as a whole was at a ten-month high… Higher workloads encouraged service providers to hire additional staff in January, following a stagnation in the prior month. …Meanwhile, manufacturing jobs rose at a marginal rate.” While overall Indian economy has clearly returned to robust growth, underlying conditions remain relatively weak by historical standards. 3mo average Composite index at current 51.7 is well below the historical average of 54.8. India remained on track to being the strongest economy in the BRIC group overall for the 7th month in a row.

In the case of Brazil’s Composite PMIs, the index registered continued rate of contraction rate of contraction for 11th month in a row - a record that is worse than that for Russia. Over the last 24 months, Brazil’s Composite PMI has managed to reach above 50.0 on only 5 occasions, against Russia’s Composite PMI’s 7. Over the last 12 months, Brazil’s Composite PMI was above 50.0 only once, with Russian counterpart rising above 50.0 in 4 months. On a 3mo average basis, Brazil’s Composite PMI stood at 44.5 in January 2016, slightly better than 43.4 reading for the 3mo period through October 2015, but below 49.3 reading attained in January 2015. Per Markit: “January saw Brazil’s economic recession weighing on the private sector for another month …the seasonally adjusted Composite Output Index remained in contraction territory, highlighting a further sharp drop in activity. Moreover, the current sequence of continuous downturn has been extended to 11 months, the longest in almost nine years of data collection.” Both Services and Manufacturing sectors order books posted contractions, meaning that “the private sector as a whole posted an eleventh successive monthly decline in new business. Firms reported tough economic conditions and a subsequent fall in demand.” Once again, Brazil retained its dubious title as the worst performing BRIC economy - a title it has been holding for the last 11 months.

Charts and table to illustrate:




As shown in the above charts, Russia is now exerting a downward momentum on overall BRIC growth dynamics for the second month in a row. However, due to improvements in India and China, BRICs as a whole are now adding positive support for global growth. That support is relatively new and still fragile enough not to call a change in trend in the series.

6/1/16: BRIC Composite PMIs: December


In recent posts, I covered Manufacturing sector PMIs for BRIC economies based on monthly data and Services Sector PMIs here.

Now, let’s consider Composite PMIs for BRIC:


Brazil Composite PMI fell from 44.5 on November to 43.9 in December, As the result, the economy posted 10th consecutive month of sub-50 readings, and since April 2014, Brazil’s economy registered above 50 readings in only three months, with none of these three readings being statically significantly different from 50.0. The last time Brazil’s Composite PMI posted reading statistically consistent with positive growth was in February 2013.

In December, both Manufacturing and Services sectors indicated contracting activity, with Markit concluding that “Private sector activity in Brazil continued to plunge in December as a deepening economic retreat contributed to a further contraction in new business. The seasonally adjusted Composite Output Index fell from 44.5 in November to 43.9 at the year end, pointing to a sharp and stronger rate of reduction. Whereas the downturn in manufacturing production eased (though remained severe), services activity declined at a quicker pace.”

Over 4Q 2015, Brazil Composite PMI averaged 43.7 which is about as bad as the average of 43.6 achieved in 3Q 2015 and much worse than already contractionary average of 49.0 posted in 4Q 2014.


Russian Composite PMI was covered in detail here. Overall, Russia’s Composite index slipped into contraction during December, falling to 47.8, from 50.5 in November, with the decline in output reflected across both manufacturing production and services activity. Overall, Russian economy’s composite PMI averaged 49.1 in 4Q 2015 which is much worse than 50.4 average for 3Q 2015. The data strongly suggests that not only did the economy failed to attain stabilisation, but that growth might have turned more negative in 4Q 2015.


Chinese Composite PMI also signalled declining business activity in December, falling to 49.4 from 50.5 in November. Overall, China posted four months of below 50 readings on Composite PMIs out of the last 5 months and the last time Chinese Composite PMI was consistent with statistically significant growth was in August 2014. In 4Q 2015, Chinese Composite PMI averaged 49.9, which is better than 3Q 2015 average of 49.2, but much worse than the 4Q 2014 average of 51.6. Unlike Russia and Brazil, which posted sub-50 readings across both Manufacturing and Services, China posted sub-40 reading in Manufacturing and above 50 reading in Services, That said, the Services reading was 50.2 - statistically consistent with zero growth - and the second weakest on record (the weakest point was 50.0 in July 2014).


India Composite PMI rose unexpectedly from November’s five-month low of 50.2 to a four-months high of 51.6 in December. Thus, per Markit, the index was “indicative of a rebound in growth of private sector activity. Whereas manufacturing production decreased for the first time since October 2013, services activity increased at an accelerated pace.”

Further per Markit: “Leading services activity to increase was a solid rise in incoming new work, one that was faster than that seen in November. Anecdotal evidence highlighted strengthening demand conditions. Conversely, manufacturing order books decreased, with panellists indicating that demand had been suppressed by the Chennai floods. Across the
private sector as a whole, new business inflows expanded at a faster pace that was, however,
modest.”

4Q 2015 Composite PMI for India stood at 51.5, down from 52.1 in 3Q 2015 and down on 52.2 average for 4Q 2014.


Overall Russia was a negative contributor to the BRIC Composite Activity Index dynamic in December, although overall ex-Russia group performance continued to deteriorate in December faster than in November, as indicated in the chart below:



Note: Composite Activity Index is based on my own calculations weighing BRIC economies by their shares of global GDP. The Index is based on a scale of 100=zero growth.

In 4Q 2015, average Composite Activity Index for BRIC ex-Russia was 96.7 which was marginally better than in 3Q 2015 (86.5) but worse than 101.8 average for 4Q 2014.

Overall 4Q 2015 BRIC Composite Activity Index stood at 99.0, down on 99.2 in 3Q 2015 and on 102.1 recorded in 4Q 2014. 

The chart below shows a clear downward trend in BRIC activity setting on from June 2014 and accelerating since May 2015.