China's Pain = India's Gain?

For the second month in a row, the manufacturing PMI survey conducted by HSBC is pointing towards a shrink in China's factory activity. The final HSBC manufacturing PMI fell to a seven-month low of 48.5 in February 2014, a third straight monthly decline since December. The figure was in-line with the 48.3 reported in the preliminary version of the PMI released on 20 February 2014. A reading below 50 indicates a contraction, while one above 50 shows expansion. The survey indicated that the output was affected by manufacturers closing for China's biggest annual holiday, the Lunar New Year festival, which began on January 31 and covered early February, although the PMI results are seasonally adjusted.

On the other hand, the other emerging market that is showing signs of revival in the manufacturing sector is India. For the month of February 2014, the HSBC PMI for the manufacturing sector reached a one-year high of 52.5. The better figures can be attributed to faster increase in output and new orders which bolstered the index. Also, the new export business rose at a quicker clip, the survey said.

Commenting on the same, Leif Eskesen, Chief Economist for India & ASEAN at HSBC, said that "manufacturing activities picked up as new order flows have firmed with the improvement in external demand and the reduction in macroeconomic uncertainty since last summer. This, in turn, has provided a lift to output growth."