GLOBAL ECONOMY Asia’s factory activity shrinks as China lockdown impact widens

  • China’s private survey shows continued PMI contraction
  • Factory activity shrank in Japan, South Korea
  • The polls highlight the bleak outlook for Asia next year

TOKYO, Dec 1 (Reuters) – Factory output fell broadly across Asia in November as slowing global demand and uncertainty over fallout from China’s strict COVID-19 lockdown weighed on business sentiment, private surveys showed on Thursday.

The results highlight Asia’s bleak economic outlook for 2023, as the shutdown disrupts international supplies and raises fears of another downturn in its economy, the world’s second largest.

Amid the pandemic curbs, China’s factory activity shrank in November, a private survey showed on Thursday. The result involved weaker employment and economic growth in the fourth quarter.

Manufacturing activity also contracted in export-dependent economies, including Japan and South Korea, and in emerging nations, such as Vietnam, underscoring the broad damage from weak global demand and stubborn input costs, the surveys showed.

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“Cooling market conditions, sustained price pressures and underlying weak demand, both domestically and internationally, were reported to be key factors contributing to the decline,” said economist Laura Denman of S&P Global Market Intelligence, which compiles the survey. on Japan.

China’s Caixin/S&P Global manufacturing purchasing managers’ index (PMI) stood at 49.4 in November, up from 49.2 in the previous month, but is still below the 50 mark, which separates growth from contraction. It has now been below 50 for four consecutive months.

The figure followed downbeat data from an official survey on Wednesday that showed manufacturing activity hit a seven-month low in November.

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Analysts see downside risks rising to China’s economic growth in the fourth quarter, despite a raft of policies to boost activity, including reductions in banks’ required reserve ratios and support for the sluggish property sector.

Japan’s Au Jibun Bank PMI also fell, to 49.0 in November from 50.7 in October. It was the first contraction since November 2020.

South Korea’s factory activity shrank by a fifth in November, but the decline moderated slightly, possibly suggesting the worst is over for businesses.

Still, South Korea’s exports in November suffered their biggest annual drop in 2-1/2 years, separate data showed on Thursday, hit by cooling global demand in major markets led by China and a downturn in industry. semiconductors.

The shutdown in China has hit production at a factory there that is the largest iPhone producer Apple Inc ( AAPL.O ). They also sparked rare street protests in many cities.

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The impact of China’s misery was felt widely across Asia. Taiwan’s PMI stood at 41.6 in November, up slightly from 41.5 in October but remaining far below the 50 mark.

Vietnam’s PMI fell to 47.4 in November from 50.6 in October, while that for Indonesia slipped to 50.3 from 51.8, private surveys showed.

In a rare bright sign, India saw factory activity expand in November at its fastest pace in three months, thanks to strong demand for consumer goods and a slowdown in input-price inflation.

Report by Leica Kihara; Edited by Bradley Perrett

Our Standards: The Thomson Reuters Trust Principles.

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