Growth in the emerging markets gained momentum in January, with manufacturers registering their strongest increase in production since May 2011. The HSBC Emerging Markets Index (EMI) rose from 53.0 in December to 53.9* in January, the highest figure since February 2012. HSBC's EMI is a monthly indicator derived from HSBC Purchasing Managers' Indices that follow 16 key emerging economies.
Manufacturers posted a third successive month of expansion while the services sector registered the strongest growth in four months.
After a difficult 2012, economic conditions in the emerging markets are continuing the improvement which began last August
Global Head of Emerging Markets Research
Employment growth was maintained, a trend shown since August 2009, while cost pressures in emerging markets were at their highest in three months. New business growth in emerging markets hit a 22-month high in January and new manufacturing orders rose at their fastest rate since April 2011. Only Egypt, South Korea, the Czech Republic and Poland suffered declines in January.
Manufacturing output expectations for Poland and the Czech Republic were the weakest of all emerging economies, reflecting exposure to weak European demand.
“After a difficult 2012, economic conditions in the emerging markets are continuing the improvement which began last August,” says Pablo Goldberg, Global Head of Emerging Markets Research. “Both manufacturing and service readings suggest economic activity is not just being supported by resilient domestic conditions, but also now by a pick-up in new export orders.”
China’s manufacturing figures for January were particularly strong with output rising at the strongest rate since March 2011, supported by new order growth. Improving demand from US and European markets lifted new export business after a flat December.
Mr Goldberg says that the pick-up in manufacturing activity is supported by the turnaround in the outlook for China “which is slowly pulling the rest of Asia with it”. But he points out that countries closer to the eurozone are still struggling.
Turkish output grew at the sharpest rate since March 2011 with marked increases in new orders and purchasing activity. In Russia manufacturing production recovered momentum, while new order growth reached a 22-month high.
Brazil’s manufacturing sector posted the strongest output growth in nearly two years, while companies in the country also increased staffing levels for the first time in 10 months.
Indonesia posted a fall in production for the first time in seven months and firms cut staff for the third month running as new order numbers failed to improve. In Vietnam, manufacturing output rose modestly and new export orders declined for the ninth month in a row.
South Korea registered a fall in output for the seventh time in eight months. But Taiwan posted the strongest growth since March 2012.
The HSBC EMI is calculated using the PMI™ data produced by the global financial information services company Markit.
*This figure was later revised to 53.8
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