Asia’s factory output weakened last month as global recession fears and China’s “zero COVID-19” policy hurt demand, business surveys showed yesterday, adding to persistent supply disruptions and darkening recovery prospects.
Further US interest rate hikes are also expected to force most Asian central banks to prevent sharp capital outflows by tightening their own monetary policies, even if it means cooling already soft economies, analysts say.
Manufacturing activity shrank in Taiwan, South Korea and Malaysia, and expanded at the slowest pace in 21 months in Japan, highlighting the pain from slowing Chinese demand and stubbornly high import costs.
China’s Caixin/S&P Global manufacturing purchasing managers’ index (PMI) stood at 49.2, up from 48.1 in September, but remaining below the 50-point mark that separates growth from contraction.
The private-sector survey was in line with an official PMI survey released on Monday that showed China’s factory activity unexpectedly fell last month.
“Asia is extremely reliant on China. Its zero-COVID policy continues to disrupt supply chains and keep Chinese travelers from returning to Asian tourist destinations. It’s also hurting the region’s exports,” Dai-ichi Life Research Institute lead economist Toru Nishihama said in Tokyo. “Another big risk is the pace of US rate increases. If the [US] Federal Reserve continues to hike rates steadily, that could ignite capital outflows from Asia and hurt exports.”
Japan’s au Jibun Bank Japan Manufacturing PMI fell to 50.7 from September’s 50.8, the weakest growth since January last year.
South Korea’s factory activity shrank for a fourth straight month as orders for exports continued to fall, the PMI showed.
That followed data that showed South Korea’s exports fell for the first time in two years last month, with working-day shipments on average declining 7.9 percent and exports dropping 5.7 percent.
Overall imports gained 9.9 percent, resulting in a trade deficit of US$6.7 billion, the nation’s seventh consecutive monthly shortfall, data showed yesterday.
“Given the country’s open economy and its subsequent reliance on exports, the looming global downturn certainly poses a downside risk for future growth,” S&P Global Market Intelligence economist Laura Denman said on South Korea’s PMI.
Taiwan’s PMI slid to 41.5 from 42.2 in September, while that for Malaysia fell to 48.7 from 49.1, surveys showed.
Factory activity in Indonesia expanded at a slower pace, with the PMI standing at 51.8, down from 53.7 in September.
India was an outlier, with factory activity expanding at a stronger pace as demand remained solid.
PMI was at 55.3, up from 55.1 in September and continuing to stay above the long-run average of 53.7, S&P said.
“Manufacturing employment increased at a marked rate that was one of the strongest since data collection started in March 2005,” as capacity-constrained factories were forced to meet demand for goods by hiring more, the agency said.
Additional reporting by Bloomberg
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) last week recorded an increase in the number of shareholders to the highest in almost eight months, despite its share price falling 3.38 percent from the previous week, Taiwan Stock Exchange data released on Saturday showed. As of Friday, TSMC had 1.88 million shareholders, the most since the week of April 25 and an increase of 31,870 from the previous week, the data showed. The number of shareholders jumped despite a drop of NT$50 (US$1.59), or 3.38 percent, in TSMC’s share price from a week earlier to NT$1,430, as investors took profits from their earlier gains
In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence (AI), smartphones and weapons central to Western military dominance, Reuters has learned. Completed early this year and undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company’s extreme ultraviolet lithography (EUV) machines, according to two people with knowledge of the project. EUV machines sit at the heart of a technological Cold
Taiwan’s long-term economic competitiveness will hinge not only on national champions like Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) but also on the widespread adoption of artificial intelligence (AI) and other emerging technologies, a US-based scholar has said. At a lecture in Taipei on Tuesday, Jeffrey Ding, assistant professor of political science at the George Washington University and author of "Technology and the Rise of Great Powers," argued that historical experience shows that general-purpose technologies (GPTs) — such as electricity, computers and now AI — shape long-term economic advantages through their diffusion across the broader economy. "What really matters is not who pioneers
TAIWAN VALUE CHAIN: Foxtron is to fully own Luxgen following the transaction and it plans to launch a new electric model, the Foxtron Bria, in Taiwan next year Yulon Motor Co (裕隆汽車) yesterday said that its board of directors approved the disposal of its electric vehicle (EV) unit, Luxgen Motor Co (納智捷汽車), to Foxtron Vehicle Technologies Co (鴻華先進) for NT$787.6 million (US$24.98 million). Foxtron, a half-half joint venture between Yulon affiliate Hua-Chuang Automobile Information Technical Center Co (華創車電) and Hon Hai Precision Industry Co (鴻海精密), expects to wrap up the deal in the first quarter of next year. Foxtron would fully own Luxgen following the transaction, including five car distributing companies, outlets and all employees. The deal is subject to the approval of the Fair Trade Commission, Foxtron said. “Foxtron will be
RSS