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Beams, construction site in Mexico

Manufacturing declined in India, Taiwan and Vietnam

Emerging economies are still growing but at a sluggish pace, according to the HSBC Emerging Markets Index. The headline figure for May* was 51.4 and unchanged from April, which was revised up from 51.3 to 51.4.

The index, which covers 16 countries, shows the joint lowest figure since September 2011 and signals that growth in global emerging markets is muted. Growth slowed in China, Brazil and Russia but accelerated slightly in India, because of a strong performance in the services sector. Manufacturing declined in India, Taiwan and Vietnam, rising only marginally in China.

Regional view

  • “Growth in EM continues to slow down. External demand remains weak and job creation lacklustre. More easing might follow”
    Pablo Goldberg
    Global Head of Emerging Markets Research
  • “Asia’s manufacturers hit another speed bump. A near-term lift appears unlikely, with new orders slowing and inventories still high”
    Frederic Neumann
    Co-Head of Asian Economic Research
  • “While Brazil keeps struggling with weak domestic demand, Mexico manufacturing output starts to rebound from a slow year start”
    Andre Loes
    HSBC Chief Economist, Latin America
  • “EM as a whole may be slowing, but the oil-rich states of the Gulf continue to prosper, led by the UAE, and a resurgent Dubai”
    Simon Williams
    HSBC Chief Economist, MENA
  • “CEEMEA (Central and Eastern Europe, the Middle East and Africa) was already performing poorly due to the weak outlook in eurozone. The sluggish EM picture is a further drag on activity”
    Murat Ulgen
    HSBC Chief Economist, Central and Eastern Europe and Sub-Saharan Africa

Andre Loes, HSBC Chief Economist, Latin America, said: “The divide between manufacturing and services increased in May, with manufacturing the weak link. Another slowdown in the pace of growth of manufacturing output in China may have negatively affected the rhythm of industrial expansion in other Asian countries. This is a reminder of the bigger impact that prolonged weakness of manufacturing in China could have on the emerging markets space as a whole.”

New business growth slowed to the second weakest pace in four years. New manufacturing orders were virtually unchanged after the second successive fall in export orders.

More encouragingly, employment rose marginally, and the HSBC Emerging Markets Future Output Index, which measures expectations a year ahead, rose for the first time in three months, though it remains weaker than the average since it was launched.

Inflationary pressure remains subdued, reflecting lower costs of raw materials and weaker pricing power.

Loes added: “Economic activity across emerging markets expanded at the same weak pace in May as in April (51.4). Softness proved slightly more broad-based than in April, with more countries showing a slowdown in their respective output index. Yet the rise in the Future Output Index, a new series tracking firms’ expectations for activity in 12 months’ time, is good news.

“India has been the bright spot among the largest emerging-market countries, while a combination of external headwinds and domestic issues has led to weakening growth in Brazil, China and Russia.”

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

*This figure was later revised to 51.3.

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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