Asia’s factories still under pressure on mixed demand rebound
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Asia’s manufacturing performance is seen as an important gauge for the health of global trade.
PHOTO: AFP
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Jakarta – Key gauges of activity at Asia’s factories failed to turn around the bearish sentiment in November, as global demand for goods remained soft and China’s faltering economic recovery tempered any optimism.
Asia’s manufacturing performance is seen as an important gauge for the health of global trade, and the latest set of purchasing managers’ index (PMI) data paints a varied picture.
For China, the export-oriented Caixin manufacturing PMI unexpectedly jumped to 50.7, beating estimates of 49.6 on Dec 1. However, the official manufacturing PMI fell to 49.4 on Nov 30, marking the second straight month of contraction.
The mixed signals out of China underline fragility within the world’s second-largest economy and add pressure on the government to provide more stimulus measures to sustain momentum headed into 2024.
While manufacturing PMIs for South Korea and Taiwan showed signs of stabilisation in activity, the mood in Japan was downbeat, according to surveys published on Dec 1 by S&P Global and au Jibun Bank.
The reading for Vietnam deteriorated as factories were squeezed by higher input costs and consumers were unwilling to pay higher prices. The score for Malaysia and Thailand improved, although still remained below the 50 mark, the dividing line between contraction and expansion.
Trade bellwether South Korea finally ended a 16-month stretch of manufacturing decline with a PMI of 50 – right on the waterline. Manufacturers increased staffing and buying on signs of improving demand. South Korea’s exports recovery likewise accelerated in November
While electronics hub Taiwan saw its PMI climb to 48.3, its best showing since March, Japan fared worse due to sharper drops in both output and new orders.
Members on the PMI survey panel “often commented on weak customer demand in both domestic and international markets”, Mr Usamah Bhatti, an economist at S&P Global Market Intelligence, said on Japan’s performance.
Meanwhile, the Philippines and Indonesia saw an increase in orders, pushing their PMIs higher to 52.7 and 51.7 respectively.
S&P economist Maryam Baluch said on South-east Asia: “If customer demand continues to wane, it will be detrimental to Asean manufacturing sector performance in the months ahead. Furthermore, business confidence regarding the year ahead remains historically muted across the region.” BLOOMBERG
