Econintersect: The HSBC/Markit Emerging Markets Index showed a decline for the second month in a row in January 2014. The index is compiled from the PMI (Purchasing Managers' Index) survey data from 17 countries, including China, India, Indonesia, South Korea, Brazil and Russia. The composite index for January was 51.4, following 51.6 in December and 52.1 in November. The November reading was the highest of 2013, after a decline in the first half of the year dropped the index briefly below 50, the dividing line between expansion and contraction.
The HSBC Emerging Markets Future Output Index tracks "expectations for activity in 12 months" time. The index picked up in January, but was weaker than the 2013 average. Manufacturing sentiment hit a ten-month high, while the outlook in the service sector fell to a record low.
China posted the strongest sentiment in ten months (manufacturing and services combined), but a weaker outlook than the remaining BRIC economies. Brazilian sentiment fell to a nine-month low. The Future Output Indexes were weak but up slightly for Russia and India.
In Asia manufacturing was much stronger for Taiwan, Vietnam and India than for South Korea, China and Indonesia.
Here is the summary from the HSBC/Markit press release:
The HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMITM surveys, fell for the second month running in January to 51.4, from 51.6 in December. That signaled a slower increase in output across global emerging markets. The EMI reading in the opening month of 2014 was the lowest since last September, and below the 2013 average of 51.7.
Manufacturing production rose at a pace little-changed from December, and one that was only slightly weaker than the historic eight-year average for the series. Slower expansions in China and Brazil, and falling output in Russia and Indonesia, were offset by stronger growth in India, Poland, Taiwan and Mexico.
Growth of services activity in the largest emerging markets slowed to a six-month low in January. India and Brazil both posted declines, while growth rates in China and Russia were weak.
New business growth in global emerging markets was little-changed from December, but slower than the average for the final quarter of 2013. Backlogs declined marginally for the first time in four months, and employment was broadly flat in January.
Inflationary pressures remained subdued. Input and output prices both increased at the slowest rates in six months. Moreover, manufacturing input prices in China declined for the first time since last July. In contrast, Turkish goods producers faced the steepest rise in input prices in nearly three years, linked to the weak currency.
- Emerging markets PMI (EMI press release, HSBC, 10 February 2014))
- Emerging markets output growth slows to 4-month low in January: HSBC (Sujata Rao, Reuters, 09 February 2014)