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05 Sep 2013

Return to growth for EMI

Return to growth for EMI

There was a fall in new orders and new export orders in India

Emerging economies returned to growth in August, albeit by a slim margin. The HSBC Emerging Markets Index (EMI) was 50.7, up from 49.5
in July.

Emerging economies are still faced with headwinds, which is evident in weak export orders, despite signs of life in the industrialised world

Murat Ulgen,
HSBC’s Chief Economist for Central and Eastern Europe and sub-Saharan Africa

This was the first rise in the EMI, which measures economic conditions in 16 countries, since March. A reading above 50 shows expansion, while below 50 shows contraction. However, August’s figure is the third-lowest reading in more than four years, indicating that emerging markets remain relatively subdued.

Murat Ulgen, HSBC’s Chief Economist for Central and Eastern Europe and sub-Saharan Africa, said: “Emerging market activity turned positive again in August, after losing traction in every month since April, and experiencing outright contraction in July. This was due to modest improvements in business conditions in China and Russia, helping to offset a steep deterioration in India and a marginal worsening in Brazil.”

Of the four largest emerging economies, China and Russia posted mild increases in output. Brazil registered a marginal drop in activity, while India posted the steepest rate of decline since March 2009. There was also a fall in new orders and new export orders in India.

Regional view

  • “No recovery yet for Egypt, but Gulf growth still strong despite political risk”
    Simon Williams
    HSBC Chief Economist, Middle East and North Africa
  • “Asian manufacturers can exhale amid better orders but FX turmoil showing in India and Indonesia, which aren’t out of the woods yet”
    Frederic Neumann
    Co-Head of Asian Economic Research, HSBC
  • “Modest expansion in Mexico, while second month of overall contraction reinforces perspective of a 3Q fall in production in Brazil”
    Andre Loes
    HSBC Chief Economist, Latin America
  • “CEE [Central and Eastern Europe] is piggybacking on eurozone recovery, looking better in comparison. Turkey faces headwinds as global liquidity deteriorates”
    Murat Ulgen
    HSBC Chief Economist, Central and Eastern Europe and sub-Saharan Africa

Across the countries surveyed, manufacturing output was flat and growth in services activity remained weak. Emerging market employment declined further. The manufacturing workforce contracted for the fourth consecutive month, while service sector staffing declined for the first time in more than four years, albeit marginally.

Inflationary pressures picked up slightly in August, with input prices increasing at the fastest rate in six months. Output prices rose for the first time in five months.

Ulgen said: “Emerging economies are still faced with headwinds, which is evident in weak export orders, despite signs of life in the industrialised world. However, the fact that China’s PMI™ is back above 50 is clearly welcome news, given Asia’s ever greater dependence on the world’s second-largest economy.”

The HSBC Emerging Markets Future Output Index, which measures expectations a year ahead, improved for the second month running to its highest level since March. Among the four largest emerging economies, sentiment was strongest in Brazil and weakest in China.

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

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 September 2013 HSBC EMI press release

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