China’s Stubborn Manufacturing Slump Drags Down The Rest Of Asia

(Bloomberg) -- Manufacturing across most of Asia deteriorated further in June as a weak Chinese economy sapped demand for goods trade in the region.

Factory activity remained stuck in contraction in neighboring countries South Korea, Japan and Taiwan, according to manufacturing purchasing managers' indexes published Monday by S&P Global and au Jibun Bank.

South Korea's PMI fell further to 47.8 in June, while Japan's reading slipped back below 50, which separates expansion from contraction, as it dropped to 49.8 from 50.6 in May. Taiwan's PMI inched up slightly but still marked a 13th straight month of shrinking activity.

The malaise has spread further down the region, with Vietnam and Malaysia's manufacturing extending contractions. Factory activity in the Philippines and Myanmar expanded at a slower pace on weaker output while region's-best Thailand saw its PMI plunge to 53.2 from 58.2.

That follows similarly dismal signals from China last Friday, with its official manufacturing PMI registering a third straight month of contraction and bolstering the case for further stimulus. 

One bright spot in the region was Indonesia, which saw its manufacturing momentum pick up in June amid stronger production, new orders and employment.

Southeast Asia is faring well “despite the post-Covid boom subsiding. That said, lingering global economic uncertainty and policy rate hikes worldwide map a challenging road ahead,” said Maryam Baluch, an economist at S&P Global Market Intelligence.

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