Asia's factory activity hit by global uncertainty, focus on China stimulus
Business
Factory activity may get some relief in coming months from stimulus unveiled by China the past week
TOKYO (Reuters) – Asia's factory activity weakened in September as soft Chinese demand and global economic uncertainty pointed to a challenging outlook, private-sector surveys showed, keeping policymakers under pressure to shore up fragile growth.
The region's manufacturers may get some relief in coming months from aggressive stimulus unveiled by Chinese authorities over the past week, including a lowering of interest rates and injection of liquidity into the banking system.
Factory activity in Japan shrank in September and expanded at a slower pace in Taiwan, purchasing managers' index (PMI) surveys showed on Tuesday, highlighting the toll soft global demand was taking on Asian exporters.
In a sign of the widening fallout from slowing US growth, South Korea’s export growth decelerated in September with shipments to the world's largest economy barely increasing, data showed on Tuesday.
In China, factories struggled to make headway, with the Caixin/S&P Global manufacturing PMI released on Monday showing a slump to 49.3 in September from 50.4 the previous month, marking the lowest reading since July last year.
It was a similar picture in Japan, which is relying on exports to boost economic growth amid subdued consumption. The final au Jibun Bank Japan PMI dipped to 49.7 in September from 49.8 in August, remaining below the 50.0 threshold that separates growth from contraction for the third straight month.
"Softer growth in new orders was the main factor weighing on manufacturing last month," said Shivaan Tandon, markets economist at Capital Economics, on Asia's PMI.
"We think weak global demand is set to remain weak in the coming months and weigh on activity in Asia for the near term," he said.
The PMI for Taiwan stood at 50.8 in September, falling from 51.5 in August. Manufacturing activity shrank in Vietnam, Malaysia and Indonesia, the surveys showed.
Growth in India’s manufacturing industry also cooled to an eight-month low in September as new orders – a key gauge of demand – grew at the weakest pace since December.
The International Monetary Fund (IMF) anticipates a soft landing for Asia's economies as moderating inflation creates room for central banks to ease monetary policies to support growth. It predicts growth in the region to slow from 5% in 2023 to 4.5% this year and 4.3% in 2025.
