Tokyo, Nov. 1 (BNA): Asia’s manufacturing activity grew in October, as emerging economies saw a decline in COVID-19 cases, but rising input costs, material shortages and slowing Chinese growth cast a shadow over the outlook, business surveys showed today. Monday.
Policymakers in the region are facing pressures on multiple fronts as they steer their economies out of the recession caused by the pandemic while also trying to keep prices in check amid rising commodity costs and a shortage of spare parts.
Factory activity in China expanded at the fastest pace in four months in October, according to the Caixin/Market Private Manufacturing Purchasing Managers’ Index (PMI) Monday, as waning cases of COVID-19 boosted domestic demand.
But a sub-index for production showed output shrank for a third consecutive month due to energy shortages and rising costs, in line with Sunday’s official PMI that showed factory activity in October contracted more than expected.
“Raw material shortages and rising commodity prices, along with electricity supply problems, have created strong restrictions on manufacturers and disrupted supply chains,” said Wang Zhe, chief economist at Caixin Insight Group, according to Reuters.
Factory activity expanded in October in Vietnam, Indonesia and Malaysia as operations gradually returned to normal after being hit by shutdowns caused by a sharp rise in COVID-19 infections.
Taiwan saw manufacturing activity grow at an accelerating pace thanks to strong demand for chips, while Japanese factory activity expanded at the fastest pace in six months in October in an encouraging sign for the world’s third-largest economy.
In a sign of the erratic nature of Asia’s recovery, factory activity in South Korea rose at the slowest pace in 13 months in October due to shrinking production and declining demand.
Material shortages and delivery interruptions have driven up input prices in Japan by more than 13 years.
“While October manufacturing PMIs point to a strong rise in manufacturing production, the industry is likely to operate through a huge backlog of orders for several months to come, and the resulting supply shortages are set to persist in other regions,” said Alex Holmes, emerging economist at Asia at Capital Economics.
The latest au Jibun Bank Japan PMI in October rose to 53.2 from 51.5 the previous month, expanding for the ninth consecutive month.
By contrast, South Korea’s PMI fell to 50.2 in October from 52.4 in September, although it managed to stand above the 50 mark indicating expansion in activity, for the thirteenth consecutive month.
Surveys showed that the PMI in Vietnam rose to 52.1 from 40.2 in September, while that of Indonesia rose to 57.2 from 52.2. Malaysia’s index settled at 52.2, up from 48.1.
Emerging economies in Asia have lagged behind advanced economies in recovering from the pain of the pandemic as delays in vaccine release and a sudden rise in variable delta cases hurt consumption and factory production.
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