Asia’s powerhouse manufacturing centers suffered weak export orders and declining output last month, surveys of purchasing managers showed yesterday, as misery wrought by the eurozone debt crisis poured pessimism over the region.
China’s official factory purchasing managers’ index (PMI) fell to an eight-month low of 50.1 last month from 50.2 in June.
At least the overall index held the right side of 50, the line dividing expansion from contraction, thanks to an output subindex that suffered only a slight slip to 51.8 from 52.
“This is not the bump that the authorities are looking for. But, the good news is that things are not getting significantly worse,” IHS Global Insight economists told clients in a note.
The HSBC China PMI, also published yesterday, rose to a seasonally adjusted 49.3, its highest level since February, but last month marked the ninth straight month that the private-sector PMI was below 50, indicating contraction.
Analysts drew some comfort from the slight improvement in the HSBC PMI, which focuses on smaller private enterprises in contrast to the official PMI that primarily covers the big state companies.
“The Chinese manufacturing data clearly highlights the soft landing that is taking place across mainland China. The low inflation environment should allow Chinese authorities to provide further stimulus in coming months,” said Craig James, an economist at Commsec in Sydney.
However, the good news pretty well stopped there, with 10 of China’s 11 major subindices in the official PMI locked under 50, showing just how much the economy is struggling to revive its momentum, with little evidence of measures aimed at boosting domestic demand taking quick effect.
The weakness of new export orders, at 46.6 in China’s official PMI, was a common trait in Asia.
Manufacturing activity in South Korea shrank the most in seven months, according to a HSBC/Markit survey, with the PMI dropping to 47.2.
South Korea’s new export orders at 48.59 last month were slightly better than in June, but hardly heartening, while Taiwan’s fell at their fastest pace since December.
As if to underscore the gloom for exporters, official South Korean data yesterday showed exports last month fell the most in nearly three years.
South Korea also released data on Tuesday showing industrial output fell four times more than expected, and Taiwan lopped a full percentage point off its forecast for economic growth this year.
Those findings reinforced the message of a PMI survey released in Japan on Tuesday, which showed the factory sector shrinking at its fastest pace since last year’s earthquake.
The slump reflects, in a large degree, the sad state of Asia’s European and US customers, though falling import demand in China was a factor for some.
In a further worrying sign for Asia, PMI employment subindices in Taiwan, China and South Korea all pointed to contraction. So far in the current downturn, Asia has yet to see a repeat of the heavy job losses suffered in the 2008-2009 global crisis.
However, India, Asia’s third-largest economy, is saddled with multiple problems, including the growing probability of a drought wrecking the farm sector, and factories grinding to a halt amid a spate of wide-scale power outages.
India’s HSBC manufacturing PMI fell to 52.9 last month from 55 in June, its biggest one-month drop since September last year.