HSBC Emerging Markets Index fell to 51.4 in January 2014

Manufacturing remains stronger than services

The HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMI surveys, fell for the second month running in January to 51.4, from 51.6 in December. That signalled 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.

Indian manufacturing moved into a higher gear in January, as new orders expanded at the quickest rate in ten months. Concurrently, exports grew at a solid pace and manufacturers raised their production for the third successive month. The rate of output growth was the strongest since February 2013.

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