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Why growth remains a major concern for India

November 08, 2013 13:25 IST

Why growth remains a major concern for India

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Services and manufacturing activities across emerging markets rose at the fastest pace in seven months in October, even as India registered its fourth successive dip in private sector output during the month, an HSBC survey says.

The HSBC Emerging Markets Index, a monthly indicator derived from the PMI surveys, stood at 51.7 in October significantly higher from 50.7 reported in September.

Of the BRIC (Brazil, Russia, India and China) economies, China, Russia and Brazil posted sharper increases in activity, but India registered a fourth successive decline in output.

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Image: A vendor stands under lanterns for sale at a Diwali market in Mumbai.
Photographs: Danish Siddiqui/Reuters

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The HSBC composite manufacturing and services PMI for China increased in October to 51.8 from 51.2 in September.

Similar trend was seen in Brazil also where private sector output in October rose to 52 from 50.7 in September.

Russia also witnessed a sharper increase in activity in October to 53.3 from 51.2 in September.

India however, registered the fourth successive decline in output.

Even though the index witnessed an improvement on a month on month basis, from 46.1 in September to 47.5 in October, it remained lower than the crucial 50 mark below which it indicates contraction.

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Image: A customer buys silver biscuits in a jewellery showroom on the occasion of Dhanteras, a Hindu festival associated with Lakshmi, the goddess of wealth, at a market in Mumbai.
Photographs: Danish Siddiqui/Reuters

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Meanwhile, new business orders across emerging markets rose at the strongest rate in seven months in October and led to the first overall rise in employment in four months, HSBC said.

"After a soft summer, there are some grounds for cheer in the October EMI which shows growth in emerging market activity at its highest level since March 2013," HSBC Chief Economist, MENA region Simon Williams said.

The aggregate measures of emerging market output, new business and employment all printed above 50 and showed significant month-on-month gains for the third month in succession, suggesting that the bounce-back in activity and confidence is gaining speed, Williams said.

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Image: Labourers shift sacks filled with paddy crop at a wholesale grain market in Chandigarh.
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The survey further noted "the pick up is broad based, with fifteen of the eighteen emerging markets covered by the PMI series showing an increase in month-on-month output".

Meanwhile, according to the HSBC Emerging Markets Future Output Index that tracks firms' expectations for activity in 12 months' time, rebounded to a seven month high in October.

Among the largest emerging markets, Brazil registered the strongest sentiment, driven by buoyant services sector expectations. Output expectations also improved in China and India, but deteriorated in Russia, HSBC said.


Image: People shop from roadside stalls at a market in Mumbai.
Photographs: Danish Siddiqui/Reuters

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