ASIAN FACTORY ACTIVITIES STUMBLE

Lacklustre domestic demand drags on growth and China’s rebound, surveys show

FACTORY activity in many Asian economies weakened last month despite a rebound in China as lacklustre domestic demand dragged on growth, surveys showed on yesterday.

Export powerhouses Japan and South Korea saw manufacturing activities shrink, as well as Taiwan, Malaysia and Vietnam in a sign of the fragile state of the region’s economies.

China’s Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rose to 51.1 last month from 50.9 in February, a private survey showed yesterday, expanding at the fastest pace in 13 months with business confidence hitting an 11-month high.

The finding joins an official PMI survey released on Sunday that showed China’s factory activity expanded for the first time in six months.

The rebound in China provides welcome relief to Beijing and investors globally, yet weakness in other parts of Asia highlights the challenge the region’s policymakers face as they wrestle with patchy signs of recovery in global demand and uncertainty on when the United States Federal Reserve would cut interest rates.

Japan’s final au Jibun Bank PMI stood at 48.2 last month — the highest level since November and recovering from February’s 47.2, which marked the fastest pace of contraction in over 3½ years.

But activity contracted for a 10th straight month as new export orders slumped, reflecting souring sentiment in key markets like China and North America, the survey showed.

South Korea’s manufacturing activity also weakened last month as slowing domestic demand offset robust overseas sales with the PMI falling to 49.8 last month from 50.7 in February.

Taiwan’s PMI fell to 49.3 last month from 48.6 in February, while Vietnam dropped to 49.9 from 50.4, and Malaysia declined to 48.4 from 49.5, surveys showed.

By contrast, manufacturing activity expanded last month in the Philippines and Indonesia.

In revised forecasts issued in January, the International Monetary Fund (IMF) projected Asia’s economy to expand 4.5 per cent this year — driven by robust US demand and expected stimulus measures in China — but said the recovery would be divergent across economies, with Japan likely to see growth slow to 0.9 per cent, in contrast to an expected 6.5 per cent expansion in India.

The IMF expects China’s economy to expand 4.6 per cent this year, slowing from 5.2 per cent in last year.