Survey: Indian service sector brightens BRIC trends

LONDON (Reuters) - The Indian service sector provided a bright spot among emerging markets in May, though manufacturing production growth in Asian economies was muted, according to an influential HSBC survey published on Thursday.

Chinese manufacturing output, which carries the most clout among emerging economies, rose a meagre amount in May with new export orders falling for a second consecutive month.

That was partly outweighed by Indian service sector activity, the index of which increased to 52 from 50.5 a month ago, with 50 denoting expansion.

HSBC's composite emerging market index (EMI), a combination of manufacturing and services PMI data was unchanged at 51.4 in May from the revised figure of 51.4 for April.

"Softness proved slightly more broad-based than in April, with more countries showing a slowdown in their respective output index," Andre Loes HSBC's Chief LATAM Economist wrote.

"India has been the bright spot among the largest emerging market countries, while a combination of external headwinds and domestic issues has led to weakening growth in Brazil, China and Russia."

Manufacturing weakened across Asia in May, with decreased output noted in India, reflective of persistent power outages, as well as in Taiwan and Vietnam. New export orders in bellwether China fell for the first time since September.

Indonesian goods producers improved in May, as output increased for the third consecutive month thanks to new incoming work. Output also increased in South Korea, helped by export orders to the United States.

HSBC's emerging markets future output index, tracking firms' expectations of activity in 12 months' time rose for the first time in three months in May, with improved sentiment driven by the service sector. Analysts expect a wash of global liquidity to trickle down to boost consumption in emerging economies, which should prop up faltering growth.

"Monetary stimulus takes time and it works in many different ways. It is moving (trends) away from savings and towards consumption," said Murat Ulgen HSBC's Chief Economist for Central Eastern Europe and Sub-Saharan Africa.

Business expectations weakened in China to their lowest levels in 2013 so far, remaining relatively subdued for both manufacturers and service providers. Brazilian business expectations improved, while Russian companies registered their best outlook since last October.

The HSBC Emerging Markets Index, a weighted composite indicator derived from national HSBC Purchasing Managers' trademark Index reports in 16 emerging economies, is now being published on a monthly basis rather than quarterly. The index is calculated using data produced by Markit.

(Reporting by Philip Baillie; Editing by Toby Chopra)