Asian factories stagnate as China’s slowdown and supply shortages emerge

Machines are seen in a disused factory for heat treatment of metals in an industrial park in Shenyang, Liaoning province, China, Sept. 30, 2021. REUTERS / Tingshu Wang

  • Japan’s factory activity growing slowest in 7 months – PMI
  • S.Korea Activity Raises, But Optimism Clouds – Poll
  • The impact of China’s slowdown is weighing on Asian economies

TOKYO, Oct. 1 (Reuters) – Asia’s manufacturing activity largely stagnated in September as pandemic factory closures and signs of slowing Chinese growth weighed on the region’s economies, polls showed Friday.

Countries where large delta variant outbreaks have decreased have seen improvements in activity, such as Indonesia and India.

But factory activity declined in Malaysia and Vietnam in September and grew slower in Japan than it has been in seven months as chip shortages and supply disruptions compounded the problems of a region still struggling to shake off the hit of COVID-19.

China’s slowdown in economic momentum dealt a new blow to the region’s growth prospects. Thursday’s official purchasing managers’ index (PMI) showed that the country’s factory activity unexpectedly contracted in September due to a tightening restriction on electricity consumption. Continue reading

While the private Caixin / Markit purchasing managers’ index performed better than expected after a slump in August, increasing signs of weakness in the world’s second largest economy are dampening the prospects for neighboring Asian countries. Continue reading

“While coronavirus restrictions on economic activity may be gradually lifted, the slow pace at which this is happening means Southeast Asian economies will stagnate for the remainder of this year,” said Makoto Saito, an economist at the NLI Research Institute.

The final purchasing managers’ index of au Jibun Bank Japan for the manufacturing sector fell from 52.7 in the previous month to 51.5 in September, marking the slowest rate of expansion since February.

Manufacturers in the world’s third largest economy had come under pressure from pandemic restrictions and increased interruptions in the supply chain, as well as from raw material shortages and delivery delays.

South Korea’s September PMI rose to 52.4 from 51.2 in August, aided by increased production and new orders.

It stayed above the 50 mark for the 12th straight month, indicating expansion of activity, but persistent supply chain disruptions clouded manufacturers’ business optimism.

Taiwan’s factory operations continued to expand, albeit at a slower pace than it has been in over a year.

Taiwan’s PMI index fell from 58.5 in August to 54.7 in September, while Vietnam’s index was unchanged from August at 40.2.

As a glimmer of hope, the PMI for Indonesia rose from 43.7 in August to 52.2, while that for India improved from 52.3 in the previous month to 53.7 in September.

“While the regional PMIs showed that the disruption from large waves of viruses in the region is easing, orders continue to pile up, meaning the resulting bottlenecks down the supply chains will persist for some time,” said Alex Holmes. aspiring Asian economist at Capital Economics.

Once seen as the engine of global growth, the emerging economies of Asia are lagging behind advanced economies in recovering from the pain of the pandemic, as delays in vaccine adoption and an increase in delta variant cases affect consumption and factory production .

Reporting by Leika Kihara; Editing by Ana Nicolaci da Costa

Our Standards: The Thomson Reuters Trust Principles.

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