Manufacturing in China and Japan shrugged off months of decline and returned to growth this month as Beijing’s targeted stimulus measures and Japan’s improving labor market supported domestic demand in Asia’s two largest economies.
However, external demand remained weak for the two export powerhouses in a worrying sign that the US and Europe may not be recovering as strongly as anticipated, meaning it could be difficult to rely on exports for growth.
MORE STIMULUS
The stakes are high for China, which may need more stimulus to offset a cooling housing market and avoid a hard landing. Japan’s weak exports take the gloss off the government’s efforts to breathe new life into its economic reform agenda.
“This month’s improvement is consistent with data suggesting that the authorities’ mini-stimulus is filtering through to the real economy,” said Qu Hongbin (屈宏斌), chief economist for China at HSBC, referring to a series of measures announced by the government in recent months to spur activity.
“We expect policymakers to continue their current path of accommodative policy stance until the recovery is sustained,” he added.
CHINA PMI GROWTH
The HSBC/Markit Flash China Manufacturing Purchasing Managers’ Index (PMI) rose more than expected to 50.8 this month from last month’s final reading of 49.4, beating a Reuters poll forecast of 49.7 and creeping above the 50-point level that separates growth in activity from contraction.
It was the first time since December that the PMI has grown, and the highest reading since November last year, when it was also 50.8.
The flash PMI data is the earliest indicator in a month to help gauge the economic momentum and thus is closely watched by investors.
Asian stock markets and the Australian dollar firmed on the news.
China’s preliminary factory reading for this month indicates sequential growth could pick up to 1.8 percent in the second quarter from 1.4 percent in the first, Lu Ting (陸挺), an economist at Bank of America-Merrill Lynch, said in a note.
MORE MEASURES
“We expect Beijing to continue rolling out more measures to stabilize growth,” Lu added.
The sub-index for new orders, a proxy to measure domestic and foreign demand, rose to 51.8, the fastest pace in 15 months. Much of the increase appeared due to stronger domestic consumption, as growth in new export orders slowed.
JAPAN PMI GROWTH
The Markit/JMMA flash Japan Manufacturing PMI rose to a seasonally adjusted 51.1 this month from a final reading of 49.9 for last month, showing the first growth in three months.
Japan’s new orders index jumped to 52.0 from 49.6, indicating consumers are shrugging off an increase in the nationwide sales tax on April 1 as strong demand for workers puts upward pressure on wages.
JAPAN EXPORTS CONTRACT
Japan’s export orders continued to contract, thwarting policymakers’ hopes that exports will help the economy shift into a higher gear after the sales tax increase.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last