Emerging nations' market output contracts in July: HSBC

The HSBC EMI fell to a new post-crisis low of 49.4 in July, down from 50.6 in June

Private sector activity across the emerging market economies including India contracted for the first time in over four years in July as manufacturing output registered a decline and services sector witnessed stagnation, an HSBC survey said today.

 

The HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMI surveys, fell to a new post-crisis low of 49.4 in July, down from 50.6 in June.

 

The latest figure is the first sub-50.0 reading since April 2009, and indicated an overall contraction of output in global emerging economies, HSBC said.

 

"Emerging markets are not yet feeling a lift from stabilising demand in the United States, Europe, and Japan," HSBC Co-Head of Asian Economic Research Frederic Neumann said.

 

Output fell across the four largest emerging economies -- Brazil, Russia, India and China. During July, China, India, and Brazil all posted lower receipts of new orders, while growth in Russia was the slowest in nearly three years.

 

During July, India expanded at a slower rate than its BRIC peers as the HSBC composite index for India, which maps both manufacturing and services sectors, stood at 48.4, whereas for China it was 49.5, Brazil 49.6 and Russia 50.1.

 

An index measure of above 50 indicates expansion.

 

Neumann further added that "domestic headwinds for growth are stiffening as well. Total new manufacturing orders fell sharply last month, while new orders for services continue to expand at a disappointing pace."

 

Meanwhile, the HSBC Emerging Markets Future Output Index that maps firms' expectations for activity in the coming 12 months' time, showed some improvement over June but was still the second-lowest figure in the last 16 months time.

 

Manufacturing sentiment weakened for the fifth consecutive month, while business expectations in services picked up slightly since June. Among the four largest emerging economies, sentiment was weakest in China.

 

Employment in global emerging markets was broadly unchanged in July compared with the previous month, while, inflationary pressures remained weak in July, the report added.