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08 May 2013

EMI slowdown

A street in India

India reported slower output growth in April

Economic growth in the emerging markets slowed in April to its lowest level since September 2011, according to the HSBC Emerging Markets Index (EMI). The headline figure fell to 51.3* in April, from 52.5 in March.

Manufacturing output rose at the slowest rate since November 2012, while growth in the services sector was the weakest since May 2009.

Regional view

  • "The slowdown in EM continues. External demand weakens and employment readings now show some softening. Luckily inflation eases as well, allowing for loose policies"
    Pablo Goldberg
    Global Head of Emerging Markets Research
  • "The region is losing further momentum with only a few exceptions. Steep fall in commodity prices will likely support further easing"
    Murat Ulgen
    HSBC Chief Economist, Central and Eastern Europe and Sub-Saharan Africa
  • "Gulf demand is holding up well for now, but slumping growth and rising inflation show Egypt’s problems continuing to worsen"
    Simon Williams
    HSBC Chief Economist, MENA
  • "Asia’s trade cycle turned, weighing especially on China. Local demand has softened, too, but ample liquidity will prevent full downturn"
    Frederic Neumann
    Co-Head of Asian Economic Research
  • "Soft US economy remains a headwind in Mexico, while services lead to slight acceleration in Brazil; manufacturing remains tepid though"
    Andre Loes
    HSBC Chief Economist, Latin America

Of the largest emerging economies, China, India and Russia reported slower output growth in April. The exception was Brazil, although its rate of expansion remained modest.

Manufacturing in India increased fractionally in April after a strong rise over the first quarter of 2013. Persistent power shortages hampered output, which increased at its slowest pace for four years.

The rate of expansion in China’s manufacturing sector eased in April. Growth in new orders fell to a five-month low while new export orders dropped for the first time since December 2012.

Expectations for future output in emerging markets deteriorated. The HSBC Emerging Markets Future Output Index, which tracks the expectations for business activity in 12 months’ time, fell for the second month running, signalling the weakest sentiment since last September.

Any figure above 50.0 signals expansion, while below 50.0 indicates contraction. HSBC's EMI is a monthly indicator that is derived from the HSBC Purchasing Managers’ Index surveys of 16 key emerging economies.

Frederic Neumann, Co-head of Asian Economic Research at HSBC, said: “Weaker economic growth across most advanced markets is now being felt in the emerging world as well. New export orders in the manufacturing sector, for example, contracted in April after expanding throughout the first quarter of the year. While this could be shrugged off as a temporary correction in the trade cycle, the softness of service-sector PMIs suggests that a broader, more home-grown deceleration is occurring across emerging markets as well, even if they are expanding for the most part.”

The HSBC Emerging Markets Future Output Index from April 2012 to April 2013


* This figure was later revised to 51.4

The EMI is derived from HSBC Purchasing Managers’ Index™ reports in 17 emerging economies. A reading above 50 signals growth; below 50 signals contraction.

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.

Read the May 2013 HSBC EMI press release

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