Asia’s factories sustain expansion, supply chain woes cloud outlook By Reuters

Spread the love

© Reuters. FILE PHOTO: Employees wearing face masks work at a factory of the component maker SMC during a government organised tour of its facility following the outbreak of the coronavirus disease (COVID-19), in Beijing, China May 13, 2020. REUTERS/Thomas Peter

By Leika Kihara

TOKYO (Reuters) – Asia’s factory activity continued to expand in May thanks to an ongoing recovery in global demand, surveys showed on Tuesday, though rising raw material costs and supply chain constraints clouded the outlook.

A spike in COVID-19 infections in countries like Taiwan and Vietnam could disrupt semiconductor output and supply chains, posing a headache for manufacturers and weighing on Asia’s export-driven recovery, analysts say.

Japan and South Korea saw an expansion in factory activity moderate in May, purchasing managers’ indexes (PMI) showed on Tuesday, underscoring the fragile nature of their recoveries.

“A spread of new variants is already having a negative impact on supply chains. If this situation persists, it would hit Asian manufacturers that had been scrambling to diversify supply chains out of China,” said Toru Nishihama, chief economist at Dai-ichi Life Research Institute.

“Asia’s recovery has been driven more by external than domestic demand. If companies have trouble exporting enough goods, that bodes ill for the region’s economies,” he said.

China’s factory activity expanded at the fastest pace this year in May on solid demand at home and overseas, though sharp rises in input prices and strains in supply chains crimped some firms’ production, a survey showed on Tuesday.

The Caixin/Markit Manufacturing PMI, which focuses on smaller firms, rose to 52.0 last month, the highest since December and inching up from April’s 51.9.

The survey followed China’s official PMI on Monday, which showed factory activity in the world’s second-largest economy slowed slightly in May on surging raw material costs.

Factories in Taiwan and Vietnam were so far holding up despite rising infections. Taiwan’s PMI stood at 62.0 in May, slowing from April but remaining well above the 50-mark that separates growth from contraction.

Vietnam’s PMI also stayed above 50 at 53.1 in May, though slowing from 54.7 in April.

The final au Jibun Bank Japan Manufacturing PMI dropped to a seasonally adjusted 53.0 in May from 53.6 in the previous month, but higher than a 52.5 flash reading.

A global chip shortage and supply chain disruptions have hit car production, causing Japan’s output growth to miss expectations in April.

Japanese auto giants Toyota Motor (NYSE:) and Honda Motor have suspended output in Malaysia due to lockdown measures imposed to combat the pandemic, Kyodo news agency reported on Tuesday.

Separate data released on Tuesday showed Japanese companies cut spending on plant and equipment for the fourth consecutive quarter in January-March, as the economy struggles to shake off the drag from the coronavirus pandemic.

South Korea’s PMI stood at 53.7 in May, slowing from April but extending growth into an eighth straight month.

In a sign South Korean firms were facing rising cost burdens, however, the survey also showed a gauge of input prices surging to its highest level in over 13 years.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link

  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Registered For FREE Forex Training!

Fill In Your Details To Get Registered For FREE Forex Training!