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Business activity in emerging countries near-stagnant for 2nd consecutive month

Updated: May 08, 2014 03:43:15pm
New Delhi, May 8 (KNN)  For the second month running, business activity in emerging countries showed only a marginal increase in output across global emerging markets in April, posting an index of 50.4 from 50.3 in March, well below its eight and a half year long run trend level of 53.9, a HSBC report said.
The HSBC Emerging Markets Index (EMI) is a monthly indicator derived from the PMI (Purchasing Managers Index) surveys.
Commenting on the EMI, Chief Economist, Markit, Chris Williamson said, “The EMI data show a near-stagnation of business activity in the emerging markets for a second successive month in April. The malaise looks to be set in: companies are certainly not expecting any imminent upturn, with expectations about the year ahead in fact deteriorating further.”
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 little-changed from March’s eight-month low. Backlogs of work fell for the fourth month running while a marginal cut in employment was signalled.
 “The weakness of the survey data adds to fears that emerging market languidity will continue to act as a dampener on global economic growth in coming months. The concern is that the moribund economic picture is also broad-based, encompassing Asia, South America and Africa,” Williamson said.
With regard to manufacturing, factories across India continued to report improving operating conditions in April. That said, growth of both production and new orders moderated, it said.
In addition, it said that manufacturing expectations remained buoyant in South East Asia, with the Future Output Indexes for Indonesia and Vietnam remaining above their long-run averages.  Further north, South Korea and Taiwan reported the third- and fourth-strongest output expectations respectively in over two years of data collection. Meanwhile, manufacturing sentiment in China and India remained relatively subdued, while Russia posted a rebound in output expectations from March’s record low.
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, it said.
“Russia is seeing its steepest downturn since the height of the global financial crisis; China’s PMI is signalling contraction for a third month running, suggesting GDP growth will weaken further in the second quarter, while Hong Kong, India and Brazil are also contracting, albeit at only marginal rates. Falling output in South Africa and Egypt meanwhile points to renewed economic weakness on the African continent,” Williamson noted.
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. (KNN/ES)


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