China Manufacturing Slump Weighs On Asia Factory Activity

(Bloomberg) -- China&#039;s factory activity shrank for the fifth straight month in February, with weak demand in the world&#039;s No. 2 economy weighing on manufacturers across Asia.The official manufacturing purchasing managers index for China came in at 49.1 last month, the National Bureau of Statistics said Friday. However, the Caixin PMI &mdash; a private survey that focuses on smaller firms &mdash; improved to 50.9.Surveys of factory managers from elsewhere showed manufacturers in North Asia cut output and new orders last month amid subdued customer spending both from domestic and international markets.S&amp;amp;P Global data showed Taiwan&#039;s PMI edging down to 48.6 in February from 48.8 the month prior, keeping it below the 50 waterline that separates expansion and contraction. It&#039;s the 21st straight month that manufacturing conditions have stayed in contraction territory in the trade-reliant economy.Japan&#039;s PMI also fell to 47.2 from 48, dragged down by its sharpest decline in exports in 11 months, according to data published by au Jibun Bank. Mainland China was cited as a key source of reduced international sales, along with weak orders in US and Europe. As a result, factories also cut employment levels and purchasing activity.&ldquo;Supply pressures were also evident, as delivery times reportedly lengthened to the greatest extent since February 2023,&rdquo; said S&amp;amp;P Global Market Intelligence&#039;s Usamah Bhatti about the Japan data. &ldquo;Anecdotal evidence suggest that logistical disruption caused by the situation in the Red Sea and the residual impacts of the Noto Peninsula earthquake weighed on suppliers.&rdquo;In Southeast Asia, Thailand was the laggard with its PMI worsening to 45.3 last month from 46.7 in January. New orders also declined at their sharpest pace since the pandemic. Malaysia and Myanmar remained in contraction territory. Only Indonesia, the Philippines and Vietnam posted above-50 readings in February.The region saw inflationary pressures flare up anew. Factories were squeezed by rising prices of raw materials but were unable to pass on costs in full against the backdrop of tepid demand.&ldquo;Manufacturers will need to see stronger and sustained growth of new business before they can be confident enough to invest in inputs and start to raise their selling prices more in line with their own cost burdens,&rdquo; said S&amp;amp;P Global&#039;s Andrew Harker of the Vietnam release.The latest data comes amid fresh warnings from the World Trade Organization that global commerce is performing weaker than expected this year after unexpected economic headwinds and the reemergence of protectionism. Demand remains modest among major economies, while shipping is disrupted as conflict and drought hit the key waterways of the Red Sea and the Panama Canal. Merchandise trade likely fell short of the WTO&#039;s forecast of 0.8% growth in 2023, and this year&#039;s estimate of 3.3% gain this year may prove to be too optimistic as well.(Updates with China data, regional context.)More stories like this are available on bloomberg.com&copy;2024 Bloomberg L.P.

China Manufacturing Slump Weighs On Asia Factory Activity

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