Asia’s factory output reportedly slumped last month due to the reduced demand in China and developed economies apart from the region's ongoing cost pressures. This casts doubt on the chances for the region's economy to rebound, as per surveys.
Manufacturing activity decreased in Malaysia and Taiwan and increased more slowly in September compared to August in Vietnam and Japan as increasing raw material prices and the bleaker outlook for the world's economy dampened market sentiment.
The surveys followed China’s data on industrial and service activities, released last Friday, which suggested that the world's second-largest economy will continue to decline due to severe Covid-19 lockdowns that interrupted production and decreased sales.
In September, the au Jibun Bank Japan Manufacturing PMI (Purchasing Managers' Index) fell to 50.8 from 51.5 the month before, representing the slowest increase since January 2021.
Japan’s PMI survey revealed that due to weaker demand from China and other trading partners, new orders decreased at the highest rate in two years, whilst output had its worst annual decline.
According to senior economist Joe Hayes, S&P Global Market Intelligence, the decline in the yen is doing little to support export volume and is therefore dramatically pushing up imported inflation and domestic pricing pressures.
Taiwan's PMI fell from 42.7 in August to 42.2 in September, remaining under the 50 threshold that distinguishes monthly expansion from contraction.
High inflation has compelled the United States and European central banks to raise interest rates, igniting concerns of a sudden decline in global demand, which had supported Asian exports.
The economic recovery in Asia has also been hampered by China's recession. Many economists anticipate China's economy to increase by just 3% this year, which represents the lowest growth since 1976, discounting the 2.2% increase when the initial Covid-19 strike in 2020, provided Beijing considerably relaxes zero-Covid-19 soon.
Data released last Friday revealed that China's official PMI increased from 49.4 in August to 50.1 in September.
Source credit: https://www.straitstimes.com/business/economy/asias-factories-paint-picture-of-uneven-recovery-in-september