Asia’s factories encounter hurdles in further North-South split
ASIA’S manufacturing activity encountered some speed bumps in March as the Chinese economic recovery gained momentum at the end of the first quarter while the global economic outlook darkened.
Surveys of purchasing managers at factories across Asia showed a continued divergence between North and South in March, with Japan, South Korea, and Taiwan all staying in contraction territory while much of South-east Asia’s factory outlooks remained in expansion, according to S&P Global on Monday (Mar 3).
Japan registered a 49.2 reading from 47.7 last month, the au Jibun Bank and IHS Markit PMI showed. South Korea slipped to 47.6 from 48.5, the worst since September. Taiwan’s factory gauge stayed in contraction territory — below 50 — in March, sliding to 48.6 from 49 the previous month, data showed on Friday.
Some of the region’s export powerhouses still see subdued demand amid a global economic outlook beset by elevated inflation and borrowing costs and rising risks of recession. North Asian economies also are dealing with geopolitical risk and volatility in the semiconductors industry, while those in South-east Asia have seen healthier orders for their more critical goods exports.
There was a brighter outlook in South-east Asia, where the region’s biggest economy, Indonesia, ticked up to 51.9 from 51.2, the best showing since September. Thailand and the Philippines eased slightly while staying in expansion. Vietnam slipped to 47.7 from 51.2 while Malaysia posted a slight contraction at 48.8.
“Optimism across the region remained strongly upbeat, and with inflationary and supply chain pressures subsiding, this bodes well for the recovery of the sector,” Maryam Baluch, an economist at S&P Global Market Intelligence, said of the South-east Asia region.
Chinese manufacturing kept up expansion in March, easing slightly to 51.9 from 52.6 the previous month, according to the official PMI released on Friday from the National Bureau of Statistics (NBS).
Other PMI figures that were released on Friday showed that the Chinese economic rebound will likely still be led by services activity.
The NBS said those sectors picked up “as the effects of local governments measures to promote consumption kicked in” and households showed willingness to spend and travel. Warmer weather also helped to get construction projects going across the country, it said. BLOOMBERG
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