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EMI edges ahead

The goods-producing sector showed the best performance since May

Growth in the emerging markets remained lacklustre despite increasing marginally in September, according to the HSBC Emerging Markets Index. The index rose to 50.8* from 50.7 in August.

The September PMIs™ show economic conditions in emerging markets are showing marginal improvement, although the data remains disappointing overall

Pablo Goldberg,
Global Head of Emerging Markets Research, HSBC

The average EMI for the third quarter was 50.3, the lowest since the first quarter of 2009 during the global financial crisis. The goods-producing sector showed the best performance since May but growth rates for manufacturing output and services were weak in September.

Output rose modestly in China, Brazil and Russia, while India posted the third successive fall and the fastest decline since March 2009, reflecting weakness in the service sector. New business growth was weak across the 16 emerging economies covered, and the level of business outstanding continued to fall. But employment steadied after two months of job cuts.

The EMI is derived from the monthly HSBC Purchasing Managers’ Index™ reports. A figure above 50 signals expansion, while below 50 shows contraction.

Regional view

  • “Egypt’s still weak readings are disappointing, but growth in the Gulf is shrugging off political risk to go from strength to strength”
    Simon Williams
    HSBC Chief Economist, MENA
  • “At last, Asia is getting a lift from the global industrial bounce. Indonesia and India, too, are looking up. China should stay the course”
    Frederic Neumann
    Co-Head of Asian Economic Research
  • “A lacklustre 3Q; manufacturing still contracting in Brazil, and barely stable in Mexico, while services remain expanding in Brazil, even if modestly”
    Andre Loes
    HSBC Chief Economist, LATAM
  • “CEE [Central and Eastern Europe] recovery is on track. While Turkey surprises to the upside, we expect slowdown from here due to tighter financial conditions”
    Murat Ulgen
    HSBC Chief Economist,
    Central and Eastern Europe and
    sub-Saharan Africa

Pablo Goldberg, Global Head of Emerging Markets Research, HSBC, said: “The September PMIs™ show economic conditions in emerging markets are showing marginal improvement, although the data remains disappointing overall. About half of the emerging market manufacturing PMIs™ are back above 50, with three quarters of the countries covered seeing improvements, compared to less than half a month ago.

“Most strikingly, headline PMI™ manufacturing is above 50 in China for the second month in a row, and the recovery in the developed world is continuing. These developments should help anchor economic activity in the rest of the emerging markets, in particular its export sector. In fact, new export order PMIs™ are showing some improvement in places like Mexico, the most open Asian economies, and Central and Eastern Europe, Middle East and Africa.”

Goldberg said that the September PMI™ figures suggested that domestic economic conditions were still weakening in emerging markets, with the future output index for manufacturing outperforming that of services. The EMI showed that input prices in September rose at the fastest rate for seven months, though the pace of inflation remained weak against its eight-year average, mainly because of relatively weak price pressures in China.

*This figure was later revised to 50.7.

The intellectual property rights to the HSBC Emerging Markets Index provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under licence. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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