While growth remained relatively broad-based with both manufacturing and service sectors remaining in expansion, the slowdown of manufacturing output growth to near-neutral levels will be worth monitoring in these economies, according to S&P Global Market Intelligence.
This is especially with forward-looking PMI indicators signalling the potential for manufacturing sector conditions to further moderate.
Emerging market economic growth decelerated again at the end of Q3 2024, with manufacturing output growth slowing down to near-neutral levels, according to S&P Global’s PMI surveys.
Cost pressures eased for emerging market businesses for both goods producers and service providers in September.
Only three of the four major emerging market economies—India, Brazil and China—expanded at Q3 end.
Cost pressures eased for emerging market businesses for both goods producers and service providers in September. While selling prices rose at a slower pace as a result of lower cost pressures, it also reflected the reduction in pricing power as emerging market businesses grapple with heightened competition amid lower demand.
The PMI surveys compiled globally found that rate at which output expanded across the emerging markets collectively slowed for a fourth successive month.
The gross domestic product (GDP)-weighted emerging market PMI output index fell to 51.1 in September, down from 52.1 in August. This is the lowest reading seen since October 2023, but nevertheless extended the sequence of growth that commenced in January 2023, Jingyi Pan, economics associate director, operations-IMPG at S&P Global Market Intelligence, wrote on the company’s website.
While developed markets also grew at a slower rate, it retained the lead upon emerging markets for a third straight month and to the widest degree since May 2022.
September’s global growth was supported primarily by the service sector in September, but both the manufacturing and service sectors continued to expand for emerging markets. This marked the twenty-first successive month of broad-based expansion for emerging markets.
Manufacturing output growth slided to the softest in 11 months and was only marginal.
Only three of the four major emerging market economies expanded at the end of the third quarter, with Russia sliding into contraction after two successive months of growth. China’s expansion was the shallowest in 11 months, with manufacturing activity rising only marginally in the latest survey period.
On the other hand, Brazil’s expansion sped up in September with output rising solidly across manufacturing.
India remained the fastest growing of the four major emerging market economies. However, its expansion decelerated to the slowest since last November with manufacturing sector growth easing, albeit remaining steep overall.
The slowdown in India’s expansion coupled with catch-up by Brazil had, therefore, resulted in the smallest lead in the year-to-date for India ahead of the second-fastest growing BRICs economy.
Forward-looking indicators, especially for the manufacturing sector in emerging markets, hint at potential softening of conditions in the coming months, S&P Global Market Intelligence added.
Fibre2Fashion News Desk (DS)
