JEDDAH – The SABB/HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMI surveys, fell for the third month running to 51.1 in February, from 51.4 in the first month of 2014. That signaled the weakest growth in global emerging market output since last September, with the EMI also remaining well below its long-run trend level of 54.0. The moderation in growth in the latest period reflected the weakest rise in manufacturing output in five months, in contrast to January when the slowdown reflected weaker expansion in the service sector. Services activity in emerging markets rose at a slightly stronger rate in February, albeit one that remained relatively weak. Manufacturing output in emerging markets was weighed down by contractions in China, Russia and South Korea. Growth slowed in Mexico and remained weak in Brazil. In contrast, Poland and the Czech Republic posted sharp increases, as did Taiwan. Conditions are likely to remain subdued in March, with incoming new business rising at the slowest rate in five months. Reflecting this lack of pressure on capacity, employment was broadly unchanged over the month and backlogs of work declined further. Finally, inflationary pressures remained weak overall, despite evidence of cost pressures in Brazil, Russia, Turkey and the Czech Republic linked to exchange rates. February PMI data indicated the continued expansion of Saudi Arabia's non-oil private sector economy with output, new orders, and employment all continuing to rise, albeit at slower rates. Meanwhile, in the United Arab Emirates there were solid expansions in output and new orders at non-oil private sector companies. New export business rose at the quickest pace in the series history and input costs increased at the slowest pace for six months. SABB/HSBC Emerging Markets Index report signaled renewed expansions in output and new orders at Egyptian non-oil producing private sector firms in February, after declines were reported in January. But new export business fell for the first time in four months, linked to unusually bad weather in export markets and shipping problems. Private sector output growth in South Africa hit a ten-month high in February, but remained modest overall. New business increased at the fastest rate since November 2012, and new export orders rose for the first time in three months. Notably, average input prices and charges both increased at the fastest rates in the 32-month survey history. — SG
