Manufacturers across the emerging world appear to have continued to struggle in April, according to the latest PMI data. The slowdown was driven by weakness in the larger BRIC economies. Meanwhile, although PMIs also dropped back in some of the smaller EMs in Central Europe, they remain consistent with healthy growth in the manufacturing sector.
The weakness in EM manufacturing last month was driven in large part by the BRIC economies. Manufacturing PMIs fell in Brazil, China and India. Russia is the only BRIC economy where the PMI strengthened, but even here it is still consistent with further falls in output. The components of the headline index suggest that domestic demand was the key reason behind the disappointing performance in April. The new orders component fell in all four economies, even as new export orders held up reasonably well in most places.
"Looking ahead, the weakness of domestic demand across the BRIC economies is set to continue to hold back manufacturing growth there. This will be only partially offset by strengthening external demand. Meanwhile, smaller EM economies look better placed to benefit from improving demand from the US and Europe. As such, we continue to think that the outlook for manufacturers in Central Europe, much of Emerging Asia and Mexico remains relatively bright." said Capital Economics
