Economic Activity in Emerging Markets Recovers

Economic activity in the emerging markets recovered in October, according to the HSBC Emerging Markets Index (EMI). The index rose to 51.7, from 50.7 in September.

 

Both manufacturing and services activity registered stronger rates of expansion in October, reaching six and seven-month highs respectively. New business growth in the emerging markets accelerated at the strongest rate in seven months. This led to the first overall rise in employment in four months.

 

Despite these improvements, the EMI remains below its long-run trend level of 54.0. But the latest figure is an improvement on the third quarter which was an average of 50.3, the lowest of any quarter since 2009 during the global financial crisis.

 

Both manufacturing and services activity registered stronger rates of expansion in October, reaching six and seven-month highs respectively. New business growth in the emerging markets accelerated at the strongest rate in seven months. This led to the first overall rise in employment in four months.

 

Despite these improvements, the EMI remains below its long-run trend level of 54.0. But the latest figure is an improvement on the third quarter which was an average of 50.3, the lowest of any quarter since 2009 during the global financial crisis.

 

“After a soft summer, there are some grounds for cheer in the October EMI which shows growth in emerging market activity at its highest level since March 2013," says Simon Williams, HSBC’s Chief Economist, Middle East and North Africa. "The aggregate measures of emerging market output, new business and employment all printed above 50 and showed significant month-on-month gains for the third month in succession, suggesting  that the bounce-back in activity and confidence is gaining speed.”

 

The EMI is based on national PMI surveys of about 8,000 firms across 17 emerging economies. A figure above 50 signals expansion, while below 50 shows contraction.

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