Category Archives: Brazil PMI

6/11/2015: BRIC Services PMIs: Continued Weakness in October

Having covered BRIC Manufacturing PMIs for October here, now, let’s take a look at Services PMIs

Indian Services PMI rose to an eight-month high of 53.2 in October form September reading of 51.3. This marks fourth consecutive month of above 50.0 readings in the sector. 3mo average through October 2015 stood at 52.1, up on 49.4 3mo average reading though July 2015 and up on 50.7 3mo average through October 2014. Per Markit, “activity growth was noted in three of the six surveyed categories… Underpinning growth of services activity was a quicker increase in new business inflows. Incoming new work expanded at a solid pace that was the most pronounced since February.” In summary terms, Indian services performance improved in October, although growth rates singled remain below their historical average of 54.6.

China Services sector activity rose at a quicker rate in October (52.0) compared to September (50.5) and the fastest rate of expansion since July 2015. Per Markit, however, “…the latest reading was indicative of only a modest rate of growth that was slower than the historical average. Service sector companies saw a further rise in total new business during October. In line with the trend for activity, the rate of new order growth picked up from September’s recent low and was solid overall.” That said, 3mo average reading for the index through October stood at 51.3, which is lower than 3mo average reading of 53.0 for the period through July 2015 and is down on 53.5 3mo average through October 2014. Thus, overall, China’s Services sector has managed to turn around persistent declines in PMI readings over the previous 3 months, but activity levels in October stood well below historical average of 55.2.

Russian Services PMI posted a disappointing sub-50 reading in October at 47.8 down from 51.3 in September, basically quashing the hopes of growth momentum reversal. 3mo average through October is now at 49.4, which is worse than 51.3 average for the 3mo period through July 2015 and is identical to the reading for the 3mo period through October 2014. Per Markit release: “Latest data marked the third time in the past five months that a sub-50.0 reading has been recorded, and October’s index level was also the lowest seen since March.” This contrasts the latest reading for Manufacturing PMI that posted an improvement rising to 50.2 in October. However, with Services in a clear contraction territory and Manufacturing statistically indistinguishable from zero growth, the Composite PMI for Russia posted sub-50 reading as well. Again, per Markit: “With the exception of the Communications sector, all services sub-categories recorded a decline in activity during the month. Sub-par performance was linked to a challenging economic environment which had a negative impact on sales, which stagnated at the aggregate service sector level in October. This thereby ended a six-month sequence of new business growth, and there were some reports that the sourcing of capital funds remained tough (although in terms of sector performance Communications was again a notable outlier,
registering a strong increase in new work).”

Brazil Services PMI posted another abysmally poor reading in October at 43.0, up on horrific reading back in September. On a 3mo average basis, 3mo average through October 2015 stood at 43.2, above 40.5 3mo average through July 2015, but down 49.5 recorded for the 3mo period through October 2014. This marks 8th consecutive month of sub-50 readings for the country Services sector and 9th consecutive month of sub-50 readings in Manufacturing activity. Per Markit release: “Panel member reports highlighted frail economic conditions across the country. Incoming new work received by Brazilian service providers continued to decrease in October. Furthermore, the rate of contraction was steep as highlighted by the respective index sliding to a 79-month low.”

Table below summarises main changes:

Chart below shows developing trends:

As shown above, Brazil continues to lead BRIC group into recessionary territory in the Services sectors, with latest moderation in the rate of contraction not sufficient to compensate for activity declines over the period from march 2015 on. Back in Aril 2015, Brazil pushed past Russia as the driver to the BRIC group downside and it remains in this ‘leading’ position. Another disappointing signal came from Russia, where Services PMI singled renewed and relatively sharp pressures to the downside. This single is consistent with the view of the Russian economy as being well outside the bounds of the recovery momentum. In contrast, both India and China posted improvements in the rates of growth in October in the Services sector, although Chinese data is clearly subject to serious questions about its quality.

Overall, however, on a simple average basis, BRIC Services PMI cam in at around 49.0 with Manufacturing coming at 48.3, suggesting that overall growth conditions remain weak across the world’s leading EMs.

6/10/15: BRIC Quarterly Economic Activity & PMIs: 3Q 2015

Now, as promised, the summary of 3Q 2015 BRIC PMIs and the insights these give us into global growth trends. Note: series history refers here to data from 1Q 2006, since some countries in the group only started collecting PMI data from that period.


  • Brazil’s Manufacturing PMI averaged poorly 46.7 in 3Q 2015, which is… drum roll… an improvement on disastrous 46.1 recorded in 2Q 2015. All in, Brazil manufacturing sector contraction is now 6 consecutive quarters-long. Over the last two consecutive quarters, Brazil posted the worst Manufacturing sector performance of all BRIC economies. 
  • Meanwhile, Brazil Services PMI tanked to 41.9 on 3Q 2015 average basis from already abysmal 42.3 reading in 2Q 2015. This means that Brazil Services sectors are in a deep contraction over the last 6 months and the rate of contraction accelerated in 3Q 2015. This is the worst quarterly reading in all BRIC economies for Services sector for the second consecutive quarter running and the fourth consecutive quarter of recession in Brazil’s Services. 
  • While Manufacturing PMI in 3Q 2015 was the fifth lowest in history of the series, Services PMI hit its lowest level in history. In brief, Brazil is in deep trouble and is currently the worst performer across both manufacturing and services sectors of all BRIC economies. Brazil recorded now four consecutive quarters of sub-40 readings in both indices - the only economy in the BRIC group to have done so (in Russia case, such coincident sub-50 readings have occurred for the duration of only two quarters) in post-Crisis period.


  • Russian Manufacturing PMI averaged 48.4 in 3Q 2015 unchanged on 48.4 reading in 2Q 2015. This is the lowest (tied with 2Q) reading since 1Q 2014 and marks the third consecutive quarter of sub-50 readings in the sector. The level of contraction singled by 48.4 reading is, however, not particularly remarkable, marking the 6th sharpest rate of activity decline in series history.
  • Russian Services PMI posted a reading of 50.7 in 3Q 2015, consistent with weak growth, following 51.0 reading in 2Q 2015 and marking two consecutive quarters of above 50 readings. Growth is still weak in the sector, with 3Q 2015 reading being 9th lowest in series history.
  • Overall, Russian economy is still in a recessionary scenario, judging by PMIs although some improvement is visible in the Services side of the economy. In my view, it is too early to call the bottom of the recession, yet, but there are some potentially encouraging signs emerging.
  • Russia remained the second weakest economy in the BRIC group, only marginally (by about 0.1 points) underperforming China when comparative is taken across both sectors of the economy.


  • Chinese Manufacturing PMI fell off the cliff in 3Q 2015, declining to 47.4 compared to 49.2 in 2Q 2015. This marks second consecutive quarter of sub-50 readings for the index. 3Q 2015 index was 3rd lowest in the history of the series, highlighting just how sharp the deterioration was. Over the last 4 quarters, Chinese manufacturing failed to post a reading above 50.0 in all quarters, meanwhile, over the last 16 quarters, Chinese Manufacturing posted a statistically significant growth reading in only one quarter.
  • China Services PMI fell from 52.7 in 2Q 2015 to 51.9 in 3Q 2015. This is the 5th lowest reading in the history of the series and, although nominally above 50.0, statistically is not consistent with a signal of even moderate growth. 
  • In simple terms, China is getting dangerously close to statistically zero growth across the economy, which, in my view - given the low quality of Chinese official data - can be anywhere around 3-4 percent official GDP expansion for 2015. Potentially - lower. 


  • Indian Manufacturing PMI continued to lead the BRIC economies indices, rising to 52.1 in 3Q 2015 from 51.7 in 2Q 2015. Still, the case of growth is 9th slowest in data series history.
  • Indian Services PMI posted a strong rebound from 49.9 reading in 2Q 2015 to 51.3 in 3Q 2015. Even with this rebound, latest indicator is signalling 10th slowest rate of growth in the Services side of the economy.
  • Overall, India returned to the scenario of broadly based (across both Services and Manufacturing) growth in 3Q 2015. However, considering past performance, growth across both sectors in India was anaemic in 3Q and it has been weak since the start of 2013.

Charts below illustrate key trends:

Overall, BRIC group activity has been pretty disastrous in recent quarters, as shown in the Chart below

As the above illustrates, combined BRIC Manufacturing index is currently running at 48.5 down from 49.4 in 2Q 2015 and marking second consecutive quarter of sub-50 readings. This the third worst performance level for the indicator. Across Services sectors within the BRIC economies, activity also fell in 3Q 2015 (to 50.7) from already weak 50.9 in 2Q 2015. 3Q 2015 Services reading is 5th worst in history.

Table below summarises recent changes in quarterly PMIs:

Key conclusions: 

  • BRIC economies are in a sharp, structural slowdown across both manufacturing and services, with Brazil and Russia lingering in sustained recessions, China effectively falling off the growth cliff and India slowing down, but still generating positive growth. The rot is global - it is driving global trade and currencies imbalances and is also driven by global trade, demand and currencies imbalances. With the world’s largest EMs in deep trouble, one has to wonder how low can global GDP growth revisions go in months ahead.
  • The structural or longer-term nature of this rot is best highlighted in the last chart above, showing clearly the dramatic trend decline in Manufacturing activity starting with 2Q 2011, followed with the onset of decline in Services side of the economy in 2Q 2013.

Note: Monthly PMIs for September were covered in previous posts:
- For Services and Composite PMIs: here.
- For Manufacturing PMIs: here.

6/10/15: BRIC Services & Composite PMI: September 2015

BRIC Services PMIs and Composite PMIs are in for September. I covered Manufacturing PMIs for BRTIC economies earlier here.

Unlike Manufacturing sector, BRIC Services sector did much better, posting overall a shallow, but positive growth.

  • Russia Services PMI was covered in detail in this post. Overall, in the end Russia Services PMI reading for September ended up being tied for the highest position in the entire group alongside India’s
  • India’s Service PMI came in at 51.3, down from 51.8 in August and marking third consecutive month of above 50 readings. The rate of growth singled by the Indian PMI is, however, relatively weak. 
  • China Services PMI came in at 50.5, the second weakest reading for a BRIC economy and down on 51.5 in August. Statistically-speaking, just as with Russian and Indian Services indicator, Chinese Services PMI was not distinguishable from zero growth 50.0 marker. For the economy that never posted below 50 reading in its Services PMIs, however, current reading for China is probably consistent with a sector growth plummeting sharply. This is the lowest rate of activity since July 2014. September reading was also second lowest on record.
  • Brazil Services PMI was the only reading below 50 in the BRIC group and at 41.7 it is a very poor reading and is below August 44.8. Brazil has now posted the weakest of Services PMIs reading for all BRIC economies every month since March 2015.

As Chart above clearly indicates, Brazil weakness is sharp and sustained over some time now. In contrast, Russia has managed some stabilisation in the Services sector with very strong upward correction starting from February 2015 low. Overall, you can also see the extremely compressed and subdued growth activity in the Sector across the BRIC economies starting with 3Q 2013 on. 

Summary table below highlights recent changes in Manufacturing and Services PMIs for the BRIC economies:

Now, let’s consider Composite PMIs.

  • Again, Russia Composite PMI was covered in the separate earlier post here. In comparative terms, Russian Composite PMI was the second highest in the BRIC group after India.
  • India Composite PMI came in at 51.5 in September compared to 52.6 in August, marking a deterioration in the rate of growth in the economy. 51.5 reading is border-line significant in statistical terms, suggesting possibly sharper downturn in the economic activity than simple decline of 1.1 points suggests. Still, India posted the best performing Composite PMI of all BRIC.
  • China Composite PMI came in at disappointing 48.0 in September, down from an already weak 48.8 in August. Last two months readings suggest negative growth in the Chinese economy, although it is hard to call what exactly is happening in the actual economy. Nonetheless, China was a negative drag on the BRIC growth for the second month in a row.
  • Brazil Composite PMI literally is tanking. It hit 42.7 reading in September, down from 44.8 in August. This marks a seventh consecutive month of composite PMI for the country signalling an outright contraction in output. 

Charts above plot BRIC Composite PMIs. Several things worth noting here are:

  1. There is continued divergence in Russian PMIs (to the upside) and BRIC ex-Russia PMIs (to the downside) driven by sharp deterioration in Brazil economic environment over the last 7 months. Local peaking of BRIC ex-Russia PMIs in February 2015 is now fully exhausted and in September, BRIC ex-Russia index took a sharp nosedive. Trendiness reflect this divergence and show that it is currently well-established. In other words, although Russian economy is performing poorly, ex-Russia BRIC economies are performing even worse, even if we include into this sub-grouping a relatively well performing India.
  2. Overall, BRIC Composite PMI is on a sustained downward trend since June 2014 and in July-September 2015 this downward trend accelerated sharply. BRIC Composite PMI now signals recessionary conditions across the whole group of four largest Middle-Income and Emerging Markets economies. On a longer time line, weak performance in the BRIC economies has been now a feature of the global growth environment since the end of 1Q 2013.

I will be covering quarterly PMI signals in the subsequent post, so stay tuned.

3/9/15: BRIC Composite PMI: August

Having covered Manufacturing (link here) and Services PMIs (link here) for BRIC countries, consider Composite PMIs next.

Note, to make series consistent with my previous indicator, I use x2 factor on composite PMI readings from Markit, going forward, so reference number here is not 50.0 but 100.0.

  • Brazil Composite PMI firmed up marginally to 89.6 in August from 86.3 in July. This is the fifth highest reading in recent months, but sixth consecutive reading below 100. Per Markit: "Rising to a five-month high… the Brazil Composite Output Index pointed to a further, although weaker, decline in private sector output. Whereas manufacturing production decreased at a quicker rate, the reduction in service sector activity softened. … New business in the Brazilian service sector decreased for the sixth straight month in August. …Order book volumes at manufacturers dipped at the fastest pace in four years. Subsequently, the contraction in total private sector new work accelerated to the sharpest in three months."
  • Russian Composite PMI was also soft, falling to 98.6 in August compared to 101.8 in July, returning the economy toward renewed recessionary momentum after fragile improvement in the first month of 3Q 2015. More on Russian Composite PMI here:
  • China Composite PMI too posted sub-100 reading, falling to 97.6 in August compared to 101.6 in July. Per Markit release: "Though only modest, it was the fastest contraction of output seen since February 2009. The renewed decline in overall output was largely driven by a faster contraction of manufacturing production in August. Furthermore, the latest fall in manufacturing output was the quickest seen in 45 months. Meanwhile, slower growth in service sector business activity also weighed on the headline index. Consequently, total new business at the composite level fell for the first time since April 2014, albeit marginally. ...the latest expansion in service providers’ staff numbers was the weakest seen in the current two-year sequence of job creation and fractional. Job shedding persisted at manufacturing companies, with the pace of reduction quickening slightly since July. Overall, composite employment fell for the third month in a row and at a modest pace."
  • India Composite PMI firmed up to 105.2 from 104.0 in July, marking improved growth outlook for the economy and breaking, once again, trend with the rest of the BRICs. Per Markit: "India’s private sector economy improved further in August. The seasonally adjusted Nikkei India Composite PMI Output Index rose to a five-month high… The uptick in growth was boosted by a quicker expansion of services activity, as the increase in manufacturing production softened in August. …New business across the private sector as a whole expanded at a moderate pace that was the quickest since March."

SUMMARY: As charts above show, BRICs as a block are now exerting negative drag on the global economy. This is extremely worrying especially as the core drivers for this weakness are now China and Brazil, opposed to Russia. While Russian economy remains in a recession, overall, it is responsible for lesser share of negative momentum in the BRICs index than the other two troubled economies since around the start of 2Q 2015.

3/9/15: BRIC Servies PMI: August

BRIC Services PMIs are out, so here is the summary of latest changes:

  • Brazil Services PMI rose to 44.8 in August from July's 39.1. This marks seventh consecutive month of Services reading below 50.0. July fire was horrific and cam on top of abysmal 39.9 reading in June. August reading is still below 50, but is now the second highest in 7 months. In 12 months from August 2014, the index posted above 50 reading in only two months. This confirms deep-running recessionary dynamic in Brazil's economy.
  • Russia Services PMI came in at 49.1, below 50.0 and down on 51.6 in July. Details covered here. As noted, this is a disappointing reading signalling weak contraction in the Services side of the Russian economy, compounding sharper contraction in Manufacturing.
  • China Services PMI posted 51.5 in August, down from 53.8 in July. This index has never reached below 50.0 in its history, so 51.5 is a weak reading overall. In fact, this is the slowest pace of expansion signalled by the Services sector since July 2014. Taken together with rather sharp ongoing contraction in Manufacturing, the Services PMI for China suggests that current rate of economic growth in the country is well below the target of 7% annual rate of growth targeted by the Chinese Government. Most likely, stripping out financials (supported by the Government aggressive intervention in the stock markets in recent months), China's Services PMI would be in much worse shape.
  • India Services PMI came in at 51.8 - signalling acceleration in growth from 50.8 in July. This marks second consecutive month of above 50.0 readings for this index. 

Some Markit comments on the above:

For China: "The Caixin China General Services Business Activity Index …signalled the slowest increase in activity in the current 13-month sequence of expansion. Total new order growth at service sector companies also weakened in August, with the latest increase in new business the slowest seen in just over a year. According to anecdotal evidence, relatively subdued market conditions had dampened client demand in the latest survey period."

For India: "The seasonally adjusted Nikkei Services Business Activity Index [pointed] to a faster, although modest, expansion in output. Activity growth was recorded in three of the six monitored categories, namely, Hotels & Restaurants, Post & Telecommunication and ‘Other Services’. Leading services activity to increase was a further rise in incoming new work. According to panellists, higher demand coupled with capacity improvements and increased marketing all had contributed to the latest expansion in new business. Despite quickening since July, the rate of growth was moderate. While manufacturing new work rose at a weaker pace than in July, growth nevertheless outpaced that seen at their services counterparts."

CONCLUSION: BRIC economies are suffering from the twin effects on internal structural weaknesses (domestic markets and policies) and from lack of external demand growth. These leading emerging market economies are now solidly in a recessionary dynamic (Brazil and Russia), and near hard landing territory (China). India continues to break trend with the rest of BRICs, although this remains to be seen how long its economy can sustain this decoupling.