The overall economic performance of the emerging market economies weakened in July, according to the HSBC Emerging Markets index, a monthly indicator derived from the purchasing manager index surveys and produced by Markit. It fell to a new post-crisis low of 49.4 in July, down from 50.6 in June. The latest figure was the first sub-50 reading since April 2009. Output fell across the four largest emerging economies, the first broad-based contraction since March 2009.
Too bad there isn't an index for the advanced market economies. However, Markit does produce the J.P. Morgan Global Manufacturing & Services PMI. It was very strong last month, rising from 51.2 in June to 54.1 in July, the best reading in 16 months. Obviously, this implies that the strength in the advanced market economies more than offset the weakness in the emerging market economies. Indeed, Markit's press release noted: “The expansion remained uneven by region, however. Stronger growth was registered in the U.S. and the U.K., while the eurozone stabilized. This was partly offset by weaker performances in Asia and a number of emerging markets.”
The question is whether the growth rate in the advanced market economies will improve enough to boost the emerging market economies and their stock markets, which have been among the worst-performing ones so far this year.
Source: Ed Yardeni — Ed Yardeni is the president and chief investment strategist of Yardeni Research Inc., a provider of independent investment strategy and economics research for institutional investors.