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
Emerging economies are still faced with headwinds, which is evident in weak export orders, despite signs of life in the industrialised world
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.
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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.
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Read the September 2013 HSBC EMI press release