China’s manufacturing sector showed scant signs of picking up last month as demand stayed stubbornly weak, while exports in South Korea suffered their biggest annual drop since the global financial crisis, grim readings which prompted calls for bolder stimulus measures.
However, Japanese manufacturers saw a rebound in new orders, while Indian factories enjoyed solid domestic demand, offering a glimmer of hope for a region struggling to gain traction in the second quarter.
The focus now shifts to the US and parts of Europe, where hopes are pinned on stronger manufacturing activity to offset the global downdraft from China.
China yesterday reported that its official manufacturing purchasing managers’ index (PMI) edged up to 50.2 last month, from 50.1 in April, as it crept back into expansion territory.
However, a private survey focusing on small and mid-sized firms showed their activity contracted for a third straight month. The final HSBC/Markit PMI stood at 49.2.
Both indices are hovering around the 50 level that is supposed to mark the threshold between contraction and expansion, pointing to very subdued activity at best. And both showed a further contraction in export orders were prompting factories to shed more workers.
A separate survey showed that growth in China’s services industry cooled last month, with the non-manufacturing PMI slipping to 53.2, from 53.4. Services have been the lone bright spot in the economy.
“Overall, in our view, there are not yet convincing signs of near-term stabilization in the economy,” Barclays analysts wrote in a note to clients. “We believe risks to the outlook remain to the downside, with the property market correction and government-led infrastructure projects holding the key for the outlook.”
Indeed, the result is unlikely to cheer Beijing, which has already cut interest rates three times in six months and is widely expected to ease policy further in coming months.
“Five months into 2015, the economy sees little sign of a pick-up,” HSBC economists said. “We forecast more aggressive policy easing, including a 50-basis-point reserve ratio cut in the coming weeks.”
The sluggish performance in China and uneven demand globally has dragged on other trade-reliant Asian economies.
Data yesterday showed South Korea’s exports last month posted their worst annual fall in nearly six years, with declines in sales to all of its top markets — China, the US and the EU.
A separate PMI survey showed that South Korean manufacturing activity contracted for a third straight month last month to 47.8 — its lowest since August 2013 — from 48.8 in April.
“There are several one-off factors, but the weak export figures and the persisting weakness in other recent indicators support our view that the Bank of Korea will have to cut interest rates soon,” HI Investment & Securities chief economist Park Sang-hyun said.
The picture in Japan appeared to be slightly better, with the Markit/JMMA final PMI reading at 50.9 last month, up from 49.9 in April.
Yet, data released on Friday showed that Japanese household spending unexpectedly slumped in April and consumer inflation was roughly flat.
The patchy performance has cast doubts on the central bank’s forecast for a slow and steady economic recovery and has instead reinforced expectations it will have to pump more stimulus into the economy later in the year.
India saw the most upbeat result in the region, with its PMI expanding to 52.6, from April’s 51.3, surpassing forecasts.
The survey came on the back of figures on Friday that showed India’s economy grew 7.3 percent in the fiscal year 2014/2015, expanding faster than China for a second consecutive quarter.
Still, there are doubts over the reliability of the data, with many economists believing that changes made earlier this year to the way government statisticians calculate GDP may have distorted the macroeconomic view.
That skepticism, along with benign inflation, have kept alive expectations for another quarter point cut in the benchmark rate to 7.25 percent today, which would be the Reserve Bank of India’s third cut this year.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said its materials management head, Vanessa Lee (李文如), had tendered her resignation for personal reasons. The personnel adjustment takes effect tomorrow, TSMC said in a statement. The latest development came one month after Lee reportedly took leave from the middle of last month. Cliff Hou (侯永清), senior vice president and deputy cochief operating officer, is to concurrently take on the role of head of the materials management division, which has been under his supervision, TSMC said. Lee, who joined TSMC in 2022, was appointed senior director of materials management and
Gudeng Precision Industrial Co (家登精密), the sole extreme ultraviolet pod supplier to Taiwan Semiconductor Manufacturing Co (台積電), yesterday said it has trimmed its revenue growth target for this year as US tariffs are likely to depress customer demand and weigh on the whole supply chain. Gudeng’s remarks came after the US on Monday notified 14 countries, including Japan and South Korea, of new tariff rates that are set to take effect on Aug. 1. Taiwan is still negotiating for a rate lower than the 32 percent “reciprocal” tariffs announced by the US in April, which it later postponed to today. The
MAJOR CONTRIBUTOR: Revenue from AI servers made up more than 50 percent of Wistron’s total server revenue in the second quarter, the company said Wistron Corp (緯創) on Tuesday reported a 135.6 percent year-on-year surge in revenue for last month, driven by strong demand for artificial intelligence (AI) servers, with the momentum expected to extend into the third quarter. Revenue last month reached NT$209.18 billion (US$7.2 billion), a record high for June, bringing second-quarter revenue to NT$551.29 billion, a 129.47 percent annual increase, the company said. Revenue in the first half of the year totaled NT$897.77 billion, up 87.36 percent from a year earlier and also a record high for the period, it said. The company remains cautiously optimistic about AI server shipments in the third quarter,
Nvidia Corp CEO Jensen Huang (黃仁勳) on Thursday met with US President Donald Trump at the White House, days before a planned trip to China by the head of the world’s most valuable chipmaker, people familiar with the matter said. Details of what the two men discussed were not immediately available, and the people familiar with the meeting declined to elaborate on the agenda. Spokespeople for the White House had no immediate comment. Nvidia declined to comment. Nvidia’s CEO has been vocal about the need for US companies to access the world’s largest semiconductor market and is a frequent visitor to China.
RSS