Asia factory activity expands in May on robust global demand
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China’s private Caixin survey showed May factory activity rising at the fastest pace in two years.
PHOTO: AFP
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TOKYO - Asian factory activity expanded in May as manufacturers benefited from broadening global demand, private surveys showed on June 3, adding to hopes for sustained economic recovery in the region where China is showing early signs of a rebound.
Manufacturing activity expanded in Japan for the first time in a year and in South Korea at the fastest pace in two years, due in part to hints of a pickup in the automobile and semiconductor sectors, the surveys showed.
China’s private Caixin survey also showed factory activity rising at the fastest pace in about two years in May on strong production and new orders, offering hope of a broad-based recovery in Asia and elsewhere.
The robust readings point to recovery in the manufacturing sector underpinning Asian growth and cushioning the blow from any market volatility caused by uncertainty over the US monetary policy outlook.
Japan’s final au Jibun Bank manufacturing purchasing managers’ index (PMI) rose to 50.4 in May from 49.6 in April, having last climbed above the 50-point threshold – which separates growth from contraction in activity – in May 2023.
South Korea’s PMI also rose to 51.6 in May, the highest mark since May 2022 and coming after two months below the 50 mark, an S&P Global survey showed.
“South Korea‘s manufacturing sector appears to have caught a second wind,” said Joe Hayes, principal economist at S&P Global Market Intelligence.
“Qualitative evidence from the survey also paints a promising forward-looking picture, with panelists commenting on imminent new product launches providing them with a platform for sustainable production expansion.”
Adding to the bright signs, China’s Caixin/S&P Global manufacturing PMI rose to 51.7 in May from 51.4 the previous month, the fastest pace since June 2022 and beating analysts’ forecasts of 51.5.
The reading contrasts with an official survey on May 31 that surprised market participants by showing a fall in manufacturing activity, pointing to a mixed picture of the sprawling industry.
The upbeat private survey results compared with China’s official manufacturing PMI published on May 31 showing factory activity unexpectedly contracted last month. The two surveys cover different sample sizes, geographic locations and types of businesses, with the Caixin poll focusing on smaller and export-oriented firms.
The accelerated expansion indicated by the private gauge could offset some concerns triggered by the official survey about weakening momentum in the manufacturing sector, which Beijing relies on to boost the economy this year.
Exporters saw new orders rising for the fifth straight month in May, albeit at a slower rate, the Caixin results showed, suggesting foreign demand held up for Chinese goods.
“China’s economy is generally stable and remains on the road to recovery,” said Mr Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the release of the data. That said, pressure on employment and weaker demand than supply “remain prominent issues”, he said.
“Policies aimed at stabilising the economy, boosting domestic demand and increasing employment need to be strengthened and consistent.”
Manufacturing activity in May also expanded in Taiwan, Indonesia, Vietnam and the Philippines, private surveys showed. REUTERS, BLOOMBERG
