Manufacturing activity across Asia expanded last month, widely watched barometers showed yesterday, suggesting that the region’s export-dependent economies were continuing to recover.
China’s official purchasing managers’ index (PMI) hit 50.9 last month, its highest since April last year when the figure stood at 53.3, the National Bureau of Statistics and the China Federation of Logistics and Purchasing said.
The PMI is a widely watched indicator of economic health, with a reading above 50 suggesting expansion, while anything below points to contraction.
British bank HSBC, whose survey focuses more on smaller enterprises than the official data, said its final PMI stood at 51.6 last month, up from 50.4 in February, when the reading dipped to its lowest since October last year.
“China’s recovery continues, mainly driven by the gradually improving domestic demand conditions,” Qu Hongbin (屈宏斌), a Hong Kong-based economist with the bank, said in a statement.
Qu said that Beijing may keep to relatively loose monetary policy to boost growth as inflationary pressures were easing, with input prices falling and the economy suffering from “lingering external headwinds” — an apparent reference to the eurozone’s woes and the sluggish US recovery.
HSBC’s PMI readings for many other Asian economies all improved in the month, with Vietnam hitting a 23-month high of 50.8.
South Korea saw its strongest figure for a year, reaching 52.0 thanks to solid increases in output and new orders as demand from China and Japan was strong, HSBC said.
In Taiwan, the PMI climbed to 51.2 last month, the fourth consecutive month of improvement and up from 50.2 in February, on the back of new orders from both home and abroad continuing to rise.
HSBC’s index for Indonesia reached a four-month high of 51.3, from 50.5 in February, underpinned by a faster expansion in new orders and a slight increase in production, the bank said.
India’s figure was also positive at 52.0 last month, although that was the lowest reading for 16 months and down from 54.2 in February, as repeated power cuts weighed on activity.
Speaking of the latest data, CIMB head of research Song Seng-wun (宋城煥) told Dow Jones Newswires: “It paints a story of modest recovery rather than an all-out, straight line all-guns-blazing story, which would have pleased the market more.”
Separately, confidence among large Japanese manufacturers improved in the first quarter, a central bank survey showed yesterday, as Tokyo works to reverse years of limp growth in the world’s third-largest economy.
The Bank of Japan’s latest Tankan survey showed sentiment at minus-eight for big firms between January and last month from minus 12 three months earlier.
Those figures represent the percentage of firms saying business conditions are good minus those saying they are bad and are a key measure used by the Bank of Japan in formulating monetary policy.
The results marked the first improvement in three quarters with companies expecting a pick-up in sales and profits. However, they were cautious in their capital spending plans and the figures remained in negative territory, meaning a majority of surveyed firms are pessimistic about the future.
The economy “has come out of the worst period,” said Takeshi Minami, an economist at Norinchukin Research Institute. “There is no doubt that the mood has improved thanks to the weaker yen.”
Manufacturers have been helped by the weakening in the yen, after the currency hit a record about the 75-level against the US dollar in late 2011 and remained strong through most of last year.
The US dollar bought ￥93.88 yen in morning forex trade yesterday.