Manufacturing growth in China and South Korea slowed down last month as the pace of new orders eased amid growing uncertainty over what damage Europe’s debt crisis may do to Asia’s export-dependent economies.
After cooling in March and April, Indian manufacturing last month hit its fastest pace in more than two years, reflecting steady growth in output, new orders and employment.
Similarly, Japan’s manufacturing sector grew last month at its fastest pace in almost four years after a slowdown in April, data showed on Monday.
Last month’s global purchasing managers’ index (PMI) surveys are being closely watched by investors because they could reveal how the government debt crisis in the eurozone is impacting the world economy.
Many Asian countries are still showing double-digit gains in exports over year earlier months despite weeks of financial market turmoil triggered by the debt crisis.
“But the key word here is ‘yet’ and there still must be some caution about the near-term strength of external demand,” said Brian Jackson, senior emerging market strategist at Royal Bank of Canada in Hong Kong.
China’s official PMI released yesterday fell last month to 53.9 from 55.7 in April, just below market expectations but still the 15th straight month above the threshold at 50 that separates expansion from contraction.
A companion index compiled by British research firm Markit for HSBC dropped to an 11-month low of 52.7 last month from a downwardly revised 55.2 in April.
“Details suggest that overheating risks in China’s economy have receded under external weaknesses and domestic tightening,” Citigroup economists noted.
They expect the index to soften modestly, before a rebound later in the year and said the slowdown is consistent with seasonal patterns observed over five years.
Last month, South Korea’s PMI hit a five-month low of 54.61 compared to 57.06 in April, and India’s PMI, based on a survey of 500 firms, surged to a 27-month high of 59.0 from 57.2 in April. It is also the 14th month that the indicator has been above 50.
In Japan, the Nomura/JMMA Japan Manufacturing PMI rose to a seasonally adjusted 54.7 from 53.8 the previous month.
Manufacturing in the eurozone expanded last month, but at a far slower rate than April’s 46 month high as cost pressures and tighter margins drove firms to take their feet off the production accelerator, a survey showed yesterday.
The 16 nation bloc and its common currency have been hit by waves of investor insecurity churned up by the region’s debt crisis and fears that troubles in Greece may be spreading to other peripheral eurozone economies.
The Markit Eurozone manufacturing PMI for last month sank to 55.8 from 57.6 in April, nudged down from an earlier flash estimate of 55.9.
This is its eighth month above the 50.0 mark that divides growth from contraction, but markets were unmoved by the data.
In Germany, the bloc’s biggest economy, manufacturing activity slowed from the previous month’s survey’s record high.
Neighboring France, the second biggest, saw growth in its sector slow from April’s near 4 year high.
Spain and Italy also saw a dip in their main indexes.
A separate survey on the UK showed manufacturing activity holding on to its strongest pace in 15 years.
Eurozone manufacturers were hit by rising input prices, with that index reaching its highest level since July 2008 at 73.7 last month, compared with 73.4 in April.
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