Manufacturing Output in Emerging Markets Weighed Down by China, Russia and South Korea

The HSBC Emerging Markets Index fell for the third month in a row as manufacturing activity slowed.

 

The index dropped to 51.1 in February, from 51.4 in January, the lowest reading since September 2013.

 

The EMI is derived from HSBC Purchasing Managers’ Index reports in 17 emerging economies. A reading above 50 signals growth, while below 50 signals contraction.

 

Manufacturing output in emerging markets was weighed down by a weakening of conditions in China, Russia and South Korea. Growth slowed in Mexico and remained low in Brazil. In contrast, Poland and the Czech Republic posted sharp increases, as did Taiwan. Services activity increased, albeit at a weak rate.

 

“Emerging economies are struggling to gain traction," comments Murat Ulgen, Chief Economist for Central and Eastern Europe and sub-Saharan Africa, HSBC. The HSBC Emerging Markets Index lost ground for the third straight month, slipping to 51.1 in February. This time the weakness came from manufacturing, while services recorded a slight improvement. Details suggest manufacturing weakness in China and Russia continued to weigh on overall business conditions. Central and Eastern Europe remained strong.”

 

New business rose at the slowest rate in five months. Employment was broadly unchanged over the month and backlogs of work declined further. Inflationary pressures remained weak overall, despite evidence of cost pressures in Brazil, Russia, Turkey and the Czech Republic linked to exchange rates.

 

The HSBC Emerging Markets Future Output Index, which tracks firms’ expectations of activity in 12

 

“Looking ahead, there is little hope for a quick turnaround as new order growth lost further momentum. That said, expectations for future activity in 12 months' time are improving which is evident in healthy gains in the Future Output Index, for both manufacturing and services,” adds Ulgen.
 

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