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EMI hits four-year low

India reported a weak rate of growth while manufacturing output fell marginally in China

Emerging markets output is growing at the weakest rate for four years, according to the HSBC Emerging Markets Index (EMI). The index fell to 50.6 in June, down from 51.3 in May*, showing output is still growing but only just. An index below 50 signals contraction.

It is the EMI’s weakest outcome since the global financial crisis in 2008-2009 when, for a fleeting moment, the index dropped to a mere 42

Stephen King,
HSBC Group Chief Economist

Stephen King, HSBC Group Chief Economist, said: “It is the EMI’s weakest outcome since the global financial crisis in 2008-2009 when, for a fleeting moment, the index dropped to a mere 42.”

The index, which covers 16 countries, was dragged down by lower manufacturing production, while there was a mild increase in services activity.

Manufacturing output fell marginally in China. India and Brazil both reported weak rates of growth. Output in Russia remained unchanged from May.

King said: “Within manufacturing most countries and regions with outcomes below 50 … were to be found in Asia.  China led the way, with manufacturing output at a modest 48.6, but India, South Korea, Taiwan and Vietnam also posted contractions.”

The volume of new business in the emerging markets was largely unchanged from the previous month, weighed down by a fall in manufacturing new orders. Employment rose marginally in June.

Regional view

  • “The Gulf has slowed into the hot summer months, but the underlying story is still strong. Egypt’s outlook remains politics dependent”
    Simon Williams
    HSBC Chief Economist, MENA
  • “Asia is feeling the pinch from jittery financial markets. The road ahead looks bumpy with manufacturing slowing further”
    Frederic Neumann
    Co-Head of Asian Economic Research
  • “Softening in June point to the very weak Brazil 2Q; Mexican industry struggling, with the slowest growth since the series started”
    Andre Loes
    HSBC Chief Economist, Latin America
  • “June manufacturing PMIs show CEEMEA can buck the negative EM trend provided the eurozone side-steps the EM downturn”
    Agata Urbanska
    Economist, Central and Eastern Europe

The HSBC Emerging Markets Future Output Index, which measures expectations a year ahead, fell in June to the lowest level in 15 months. This reflected weaker sentiment in both manufacturing and services. Business expectations generally weakened in Asia, Russia and the Middle East, but improved in Latin America and Central Europe.

King said that, despite the weaker EMI numbers for June, prospects for the emerging world in the longer term remained encouraging. He added: “The latest setbacks should be seen primarily as ‘growing pains’.  China, in particular, will slowly be able to rebalance its economy away from exports and infrastructure towards domestic consumption, thanks to reforms affecting consumer credit and the provision of social security. As such, China should eventually act as a spur to other emerging nations.” 

The HSBC EMI is based on national Purchasing Managers’ IndexTM surveys of about 7,500 firms. The figure is subject to one revision after its release.  

*The index figure in May was revised down from 51.4.

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 license. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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