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EMI slowdown

Manufacturing output continued to rise at a faster rate than services activity

Emerging markets continued to grow in December, though the rate of expansion was slower than the previous month, according to the HSBC Emerging Markets Index (EMI). The index fell to 51.6, from 52.1 in November.

Emerging economies are no longer expanding at the rapid rates recorded before the onset of the global financial crisis

Stephen King,
HSBC Group Chief Economist

Manufacturing output continued to rise at a faster rate than services activity, and the rate of growth was only fractionally weaker than November’s eight-month high. Service sector output rose at the slowest rate in three months.

Saudi Arabia PMI

Saudi Arabia's manufacturing sector ended 2013 strongly, according to the Saudi British Bank HSBC Saudi Arabia Purchasing Managers’ Index™ (PMI™). The index rose to 58.7 in December, from 57.1 in November, as activity rose sharply.

The index has been above 50 throughout 2013, demonstrating the health of Saudi Arabian companies in sectors including manufacturing, services, construction and retail. An index above 50 indicates expansion, while below 50 signals contraction.

Stephen King, HSBC’s Group Chief Economist, said: “Emerging economies are no longer expanding at the rapid rates recorded before the onset of the global financial crisis. Nor have they been able to replicate the pace seen in late 2009 and early 2010 during the early post-crisis bounce.  Still, despite the relative weakness, there is no indication of any imminent descent into recession: consistently over 50, the index remains well above the traumatic levels recorded in 2008 and the first half of 2009.”

Regional view

  • “Oil-rich gulf economies remain strong into the new year; Egypt takes another small step on long road to recovery.”
    Simon Williams
    HSBC Chief Economist, Middle East and North Africa
  • “Korea and Taiwan riding the wave of electronics. But new export orders for Asia disappoint. The region fails to join global lift.”
    Frederic Neumann
    Co-Head of Asian Economic Research, HSBC
  • “Industry acceleration in Brazil and Mexico; despite slight Brazil services slowdown the region ends 2013 on stronger foot.”
    Andre Loes
    HSBC Chief Economist, Latin America
  • “CEE [Central and Eastern Europe] and Turkey finish 2013 in a solid shape although the recent political uncertainty could weigh on Turkey’s business sentiment."
    Murat Ulgen
    HSBC Chief Economist, Central and Eastern Europe and sub-Saharan Africa

The HSBC Emerging Markets Future Output Index, which measures firms’ expectations of activity in 12 months, showed that Brazilian firms expressed more optimism than their Chinese and Indian counterparts. Russian firms were the least optimistic among the four largest emerging economies.

Stephen King said that the longer-term prospects for the emerging world remained encouraging. “China is still engaged in an economic transition of epic proportions, catching up for hundreds of years of earlier disengagement with the rest of the world.  As new economic synapses are created – through both trade and capital flows – China will carry on expanding at a rapid pace, even if its ageing population imposes a demographic constraint in coming years. 

“China’s new-found wealth will, in turn, be invested in other parts of the emerging world currently lacking in 21st-century infrastructure.  Those investments will allow China easier access to the resources it craves but will also allow many emerging nations to trade more heavily with each other.  That, in turn, should be the catalyst for further economic expansion, creating a new Southern Silk Road for the emerging world.”

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 January 2014 HSBC EMI press release

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