Manufacturing sentiment throughout Asia last month remained mostly bleak amid trade tensions and waning global demand.
Purchasing managers’ indices (PMI) for South Korea, Japan and Indonesia were still in contraction territory, with South Korea’s slipping by one point to 48.
Elsewhere, the gauges largely lingered at subdued levels, with Taiwan proving to be the exception by edging higher to 50. That is the dividing line between contraction and expansion.
Photo: AFP
China’s PMI data showed a mixed picture on Monday.
The Caixin Media and IHS Markit PMI last month jumped to 51.4 from 50.4 in August, outpacing forecasts.
The nation’s official manufacturing PMI was less upbeat — rising slightly from 49.5 to 49.8, Chinese National Bureau of Statistics data showed.
“The outlook for China’s manufacturing sentiment will hinge on the progress of the US-China trade talks on 10 October,” analysts at Oversea-Chinese Banking Corp (華僑銀行) wrote in a note. “Should there be no further escalation, we think that the manufacturing sector may find its bottom soon.”
The trade dispute between Japan and South Korea has heated up, with South Korean Minister of Foreign Affairs Kang Kyung-wha last week citing “big disagreements on the issues at hand” as the two sides scrapped military and economic pacts.
Across Southeast Asia, manufacturing sentiment fluctuated among economies that have shown more resilience than neighbors to the north.
Thailand improved to 50.6 from 50, while Vietnam’s otherwise robust performance this year slipped by almost a point to 50.5, although staying in expansion territory. Malaysia’s sentiment increased by half a point to 47.9.
“Asia’s mixed manufacturing PMIs for September send a much more cautious message about the health of the region’s economies than China’s PMIs did [on] Monday,” Bloomberg Asia economists Chang Shu (舒暢) and Justin Jimenez said. “Given the lack of broad direction for the region, the sharp fall in the PMI of Vietnam — a new favorite destination for international companies thinking beyond China — seems instructive.”
Vietnam has shown to be an outlier on the positive side, with strong manufacturing and exports buoying a surge in third-quarter growth above forecasts.
Saturday’s data prompted several economists to upwardly revise their calls for this year’s growth.
Meanwhile, the eurozone’s manufacturing sector last month slumped as German factories experienced their worst month since the depths of the financial crisis.
IHS Markit’s index for manufacturing in the eurozone came in at 45.7 last month, slightly higher than the initial estimate of 45.6, but still the lowest level since October 2012.
New orders saw the sharpest contraction in almost seven years, with demand weakening both at home and abroad.
A measure of sentiment stayed subdued amid concerns over the US-China trade dispute and Brexit.
“The health of the eurozone manufacturing sector went from bad to worse in September,” which is “sending increasingly grim signals for the fourth quarter,” IHS Markit chief business economist Chris Williamson said. “The September PMI points to manufacturing output falling at a quarterly rate in excess of 1 percent, representing a severe drag on GDP in the third quarter.”
The downturn was led by Germany, the eurozone’s largest economy, which saw its factory gauge drop to 41.7, compared with a flash estimate of 41.4. That was the lowest level since 2009.
The reading for France stood at 50.1.
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