An HSBC business survey on emerging countries has stated that services and manufacturing activities across emerging markets expanded in February at the slowest pace in five months due to sluggish manufacturing growth in large developing countries such as Russia and China. HSBC Composite Emerging Markets Index, based on the survey of around 8,000 firms in 17 countries, fell for the third straight month to 51.1 in February from 51.4 in January’2014, signaling weakest growth in global emerging market output. However, monthly index remained above the 50 mark that separates expansion from contraction.
The HSBC survey indicated weakness in manufacturing output, while services activity in emerging markets rose at a slightly stronger rate in February. Employment level was broadly unchanged over the month and backlogs of work declined further. The survey further added that inflationary pressures across emerging markets remained weak in the reported month, despite some surge in cost pressure for countries like Brazil, Russia, Turkey and the Czech Republic due to their weak currency.
However, the survey stated that the manufacturing and services sectors in India expanded at a faster rate than China in February. The HSBC composite index for India, which maps both manufacturing and services stood at 50.3, whereas for China it was 49.3, lowest among BRIC nations. The HSBC Emerging Markets Future Output Index tracking firms' expectations for the next 12 months, picked up in February to an 11-month high, reflecting improved sentiment in both manufacturing and services sectors across emerging markets. The survey added that goods-producing sector retained the more optimistic outlook overall. Among the largest emerging markets, Brazil further posted the strongest overall output expectations for eight times in the past nine months followed by India. China recorded strongest expectations in 11 months for the future growth of manufacturing and services sectors.
The survey further stated that with the new business rising at the slowest rate in five months, Business conditions in emerging economies are likely to remain subdued in March. Export orders are still weak, hinting at Asia’s loss of competitiveness, although firms are more optimistic about growth ahead.
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