Tokyo, Dec. 1 (BNA): Asian factory activity grew in November as supply bottlenecks eased, but rising input costs and renewed weakness in China reduced the region’s prospects for an early and sustainable recovery from the pandemic paralysis.
The novel coronavirus variant Omicron has also emerged as a new concern for policy makers in the region, who are already grappling with the challenge of steering their economies out of recession as they try to tame inflation amid rising commodity costs and a shortage of spare parts, Reuters reported.
Caixin/Market private manufacturing PMI showed factory activity in China slipped back into contraction in November, as weak demand and rising prices hit manufacturers.
The results of the private sector survey, which focus more on small businesses in coastal regions, stood in contrast to those in China’s official PMI on Tuesday which showed manufacturing activity rose unexpectedly in November, albeit at a very modest pace.
“The easing of supply-side constraints, especially the easing of the energy crisis, has accelerated the pace of production recovery,” said Wang Zhe, chief economist at Caixin Insight Group, in a statement accompanying the data release.
But demand has been relatively weak, stifled by the COVID-19 pandemic and rising product prices.
However, away from China, factory activity appeared to be improving as PMIs showed expansion in countries ranging from Japan, South Korea, India, Vietnam and the Philippines.
Japan’s PMI rose to 54.5 in November, up from 53.2 in October, the fastest pace of expansion in nearly four years.
South Korea’s PMI rose to 50.9 from 50.2 in October, and settled above the 50 mark indicating activity expansion for the 14th consecutive month.
But production has shrunk in South Korea for the second month in a row as Asia’s fourth-largest economy struggles to fully regain momentum in the face of ongoing supply chain disruptions.
“Overall, with the influx of new export orders into countries that were previously hampered by the outbreak in the Delta region, and the ongoing disruption to the still-functioning supply chain, there is ample room for continued recovery in the regional industry,” Alex Holmes, Emerging Economist for Asia said. Capital Economics.
Manufacturing activity in India grew at the fastest pace in 10 months in November, supported by a strong rebound in demand.
The PMI in Vietnam rose to 52.2 in November from 52.1 in October, while the PMI in the Philippines rose to 51.7 from 51.0.
Manufacturing activity in Taiwan continued to expand in November but at a slower pace, with the index coming in at 54.9 compared to 55.2 in October. The picture was similar for Indonesia, which saw its PMI fall to 53.9 from 57.2 in October.
November’s surveys likely do not reflect the prevalence of the Omicron variant that could add further strain on supply chains disrupting the pandemic, as many countries impose new border controls to shut themselves down.
MI