Emerging Market Output Growth Remains Weak; Output Falls in China, India

The HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMI surveys, continued to indicate only a marginal increase in output across global emerging markets in April. The EMI posted 50.4, from 50.3 in March, well below its eight-and-a-half year longrun trend level of 53.9.


April data indicated falling output in the four largest emerging economies. Overall business activity across the Chinese manufacturing and services sectors declined slightly for the third month running, the longest sequence of contraction in over five years. Meanwhile, private sector output in Russia fell at the fastest rate since May 2009. Indian business activity fell for the ninth time in ten months, albeit marginally, while Brazil posted a fractional decline for the second time in four months.


Manufacturing output across emerging markets was broadly stagnant in April, while services activity growth was unchanged from March's weak rate. The volume of new business across both sectors rose at a rate littlechanged from March's eight-month low. Backlogs of work fell for the fourth month running while a marginal cut in employment was signalled.


Cost pressures remained subdued in April, as average input prices increased at the slowest rate since June 2013. Manufacturing input prices continued to fall in China, South Korea and Poland, while Russia and Turkey continued to post the sharpest rates of inflation.


The HSBC Emerging Markets Future Output Index tracks firms' expectations for activity in 12 months' time.


The index fell to a new low in April, mainly reflecting a sharp weakening in output expectations in Brazil and Mexico and the weakest sentiment in China in 2014 so far.


The Composite Future Output Index for Brazil hit a record low in April, with manufacturing sentiment by far the weakest since data were first collected over two years ago. Service sector sentiment was the weakest since the services PMI survey started in March 2007.


The outlook for Russia's economy picked up in April from March's low, but was still the third-weakest since the series began in April 2012.


“The weakness of the survey data add to fears that emerging market languidity will continue to act as a dampener on global economic growth in coming months," says Chris Williamson, Chief Economist, Markit. "The concern is that the moribund economic picture is also broad-based, encompassing Asia, South America and Africa."

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