Asia’s manufacturing managers are seeing stumbles in the region’s economic recovery as the COVID-19 pandemic continues to weigh on output and vaccination lags other regions.
Malaysia’s manufacturing purchasing managers’ index (PMI) declined to 39.9 last month, its lowest in more than a year, from 51.3.
Vietnam and India, which have been battling a recent resurgence of the virus, slipped below the 50 level that separates expansion and contraction.
“The recent rise in COVID-19 infections and associated containment measures once again dampened demand, stymied production and disrupted supply chains” in Malaysia, IHS Markit chief business economist Chris Williamson said. “Companies grew more concerned about the potential impact of further virus waves.”
However, Taiwan and South Korea — export powerhouses that continue to benefit from the boom in the electronics cycle and surging demand for semiconductors — remained well into expansion territory, at 57.6 and 53.9 respectively.
Asia’s export engines are scrambling to minimize disruptions to production as the virus flares up in parts of the region, including recent surges in Malaysia, Indonesia and Vietnam.
Global trade has remained a tailwind for economic growth, even as shipping costs remain elevated.
China’s relatively steady expansion is a boon for the rest of Asia, much of which relies on the world’s second-largest economy as its top trading partner.
The Caixin Media and IHS Markit manufacturing purchasing managers’ index for China eased to 51.3 from 52, a press release yesterday morning showed.
The gauge has been in expansion since May last year.
The official purchasing managers’ index for manufacturing was little changed at 50.9 last month, marking a 16th straight month of expansion, the Chinese National Bureau of Statistics said on Wednesday.
The non-manufacturing gauge, which measures activity in the construction and services sectors, decreased to 53.5 from 55.2, largely due to COVID-19 outbreaks in parts of the country.
Exports from South Korea, a bellwether for global trade, rose more than expected last month, government data showed yesterday, continuing a rally that has officials expecting shipments to reach record highs this year.
“There is a lot of investment currently under way to address the global shortfall of supply relative to the demand for semiconductors,” including around US-China technology conflicts, Rob Carnell, head of Asia-Pacific research at ING Groep in Singapore, said in a report on Wednesday.
“Extra supply will not come onstream quickly,” even as electronics demand remains strong, Carnell said.
In Japan, where the au Jibun Bank and IHS Markit PMI eased to 52.4 from 53 in May, businesses have grown more upbeat on the outlook, with sentiment at the strongest level since the series started in July 2012.
That matches the Bank of Japan’s Tankan survey out earlier yesterday, which showed confidence among Japan’s large manufacturers improving for a fourth straight quarter to its highest level since 2018, even as virus restrictions remain in place.
The Tankan continued to show a sharp divide between Japan’s service companies and its manufacturers.
Exporters are benefiting from a global recovery and weakness in the yen, while consumer-oriented businesses have been casualties of the nation’s drawn-out fight against the virus.
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