Asian factories rev up despite uncertain outlook

Workers assemble light bulbs at a factory in Suining in south-west China. Factory activity in China expanded faster than expected last month as domestic and export demand picked up. It is the seventh consecutive month that China's manufacturing PMI w
Workers assemble light bulbs at a factory in Suining in south-west China. Factory activity in China expanded faster than expected last month as domestic and export demand picked up. It is the seventh consecutive month that China's manufacturing PMI was within expansionary territory, suggesting that industrial activity remains buoyant, says one analyst.PHOTO: AGENCE FRANCE-PRESSE

Signs global economy is regaining momentum with improved figures for China, Japan in Feb

HONG KONG • Asian factories extended a global manufacturing revival as activity picked up steam last month, though the outlook for many of the region's export-reliant economies remained uncertain in the wake of United States President Donald Trump's protectionist stance.

Manufacturing surveys for Asia, including for its two biggest economies China and Japan, showed a broadly positive impulse for exports in a welcome sign for many of the companies tapped into the global supply chain.

Factory activity in China expanded faster than expected last month as domestic and export demand picked up, adding to signs that the global economy is regaining momentum. The official Purchasing Managers' Index rose to a three-month high of 51.6 compared with January's 51.3, above the 50-point mark that separates growth from contraction on a monthly basis.

"This is the seventh consecutive month that China's official manufacturing PMI stayed within expansionary territory, suggesting that industrial activity remains buoyant," said Mr Zhou Hao, emerging markets economist at Commerzbank in Singapore.

A private survey which focuses more on small and mid-sized firms offered similarly encouraging findings. The Caixin/Markit Manufacturing PMI rose to 51.7, up from 51.0 in January.

  • 51.6

  • China's PMI rose to a three-month high compared with January's 51.3.

  • 53.3

  • Japan's PMI index last month compared with January's 52.7.

In Japan, the picture was mixed, even as a pickup in manufacturing activity - at its fastest pace in three years - was accompanied by strong export orders.

The Nikkei PMI index rose 53.3 last month compared with 52.7 in January, a sixth straight month of expansion and the highest reading since March 2014. However, questions remain about domestic demand and shipments to the US, which have failed to show strong growth in the past year.

"Encouragingly, the data indicated that the current upturn in demand remains broad-based across both domestic and international markets, while a further steep increase in purchasing activity raises the prospect of continued production growth in coming months," said Ms Annabel Fiddes of IHS Markit, referring to Taiwan's strong PMI, which was 54.5 yesterday.

India also benefited, with activity expanding for a second month - not entirely surprising, given that data a day earlier showed annual growth expanded 7 per cent. However, the strong number raised scepticism among economists.

The encouraging factory activity in Asia should also be squared off against rising interest rates in the US, where any tempering in activity could prove detrimental to some of the region's globetrotting manufacturers.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 02, 2017, with the headline 'Asian factories rev up despite uncertain outlook'. Print Edition | Subscribe