HONG KONG • Factories across much of Asia posted another month of solid growth last month, rounding off a strong quarter for the world's manufacturers, even as exporters fear a rise in United States protectionism could snuff out a global trade recovery.
China again led the way, with an official manufacturing index expanding at the fastest pace in nearly five years, while factory surveys yesterday showed encouraging growth as well in Japan, India and much of emerging Asia.
Higher commodities prices and a global thirst for electronic gadgets have helped boost the value of exports, but many countries are reporting stronger sales volumes as well, even as the Trump administration starts to flex its muscles on trade.
"Asia's economic backdrop remains solid, with most countries remaining above the key threshold level of expansion, though US trade protectionism fears are the biggest uncertainty for now," said economist Aidan Yao from AXA Investment Managers in Hong Kong.
In China, the official Purchasing Managers' Index (PMI) last Friday rose to 51.8 for last month from the previous month's 51, thanks to a months-long construction boom which is helping to boost resources prices around the world.
It was the strongest reading since April 2012, though a private survey focusing on smaller firms painted a slightly more cautious picture, raising questions on whether the export recovery can be sustained.
Asia's economic backdrop remains solid, with most countries remaining above the key threshold level of expansion, though US trade protectionism fears are the biggest uncertainty for now.
ECONOMIST AIDAN YAO, who works at AXA Investment Managers in Hong Kong.
Other export-reliant Asian economies are more vulnerable if Mr Trump goes on a trade offensive.
Japanese factory activity expanded at a solid clip of 52.4 last month, though at a slightly cooler pace than in the previous month as growth in new export orders and output slowed. Its modest economic recovery has been driven largely by a resurgence in exports, which are helping to offset stubbornly sluggish demand at home.
In South Korea, where exports account for half of the economy and domestic demand is similarly weak, readings have been decidedly mixed. Factory activity shrank for an eighth straight month and at a faster pace than in February, prompting factory owners to cut jobs at the fastest pace since the global financial crisis, a private survey showed.
But official trade data at the weekend showed the country's exports grew more than expected last month, albeit at a more modest pace than in February.
Bolstering expectations of increasing resilience in the global economy, data last week showed US inflation rising at its fastest pace in five years despite some sluggishness in consumer spending.
In Europe, preliminary PMI readings had indicated businesses across the euro zone ramped up activity at the fastest pace in almost six years last month to meet burgeoning demand that came despite sharper price rises. But Britain's data may offer a slightly more mixed picture.