TOKYO, March 1 (BNA): Asia’s factories saw a rapid rebound in February amid signs that the coronavirus was having less impact on business, but the Ukraine crisis quickly emerged as a new risk that could disrupt supply chains and add to cost pressures. .
Strong international sanctions against Russia have shaken markets and boosted oil prices, adding to the woes of Asian economies and companies already grappling with rising input costs. Read more
Chinese factory indicators, both official and private, showed continued activity in expansionary territory, indicating resilience in the world’s second largest economy despite cost pressures.
Surveys showed that manufacturing activity also expanded in Malaysia, Vietnam and the Philippines as they gradually reopened their economies even as the Omicron infection continued to spread.
But factory activity growth in Japan slowed to a five-month low in February due to ongoing COVID-19 restrictions and rising input costs.
The expansion of activity in Taiwan and Indonesia also slowed in a sign of the continuing impact of supply chain disruptions caused by the pandemic.
Polls point to the fragile state of Asia’s recovery even before the Ukraine crisis.
“The most urgent blow from the crisis will come from higher oil prices, which will deal a severe blow to many Asian economies,” said Toru Nishihama, chief economist at Dai-ichi Life Research Institute in Tokyo.
“Russia is a large exporter of gas, rare metals and other commodities important for chip production. This means that the crisis could exacerbate supply chain disruptions, which would be bad news for countries like Japan, South Korea and Taiwan.”
A special survey on Tuesday showed that factory activity in China returned to growth in February as new orders rose, although employment remains mired in contraction.
Separately, China’s official Manufacturing Purchasing Managers’ Index (PMI) rose to 50.2 in February, remaining above the 50-point mark that separates growth from contraction. It picked up a reading from 50.1 in January and confounded analysts’ estimate of a slowdown to 49.9.
Japan’s PMI fell to 52.7 in February from 55.4 in January, the slowest expansion since September last year.
“The significant disruption in the supply chain that reduced production and demand in the last survey period is due to severe shortages of materials and delays in delivery,” said Osama Bhatti, an economist at IHS Markit, which is preparing the study.
Surveys showed that the PMI in Taiwan fell to 54.3 from 55.1 in January, while in Indonesia it fell to 51.2 from 53.7.
Malaysia’s index rose to 50.9 in February from 50.5, while the index for Vietnam settled at 54.3, up from 53.7 in January.