Asian factories lose momentum in May on soft export demand

NEW DELHI: Factories across much of Asia ran into a soft patch in May as export demand slowed, but analysts said the weakness was likely to be temporary amid signs of steady improvement in the global economy.

The findings from private business surveys came a day after Moody’s Investors Service painted an upbeat picture of global growth.

The readings add to signs that Asian economies generally remained buoyant in the second quarter, with manufacturing activity continuing to improve – albeit at a more modest pace – and business confidence remaining strong overall.

Still, there were mixed readings on regional powerhouse China, with official data showing steady growth fuelled by an ongoing construction boom but a private survey pointing to the first contraction in activity in 11 months.

After battling a multi-year trade recession, Asian exports have seen a strong rebound this year, often led by electronics. The tailwinds from Chinese commodities and tech products demand, however, appear to fading.

Yet, Tim Condon, ING’s chief Asia economist, says the growth outlook for the region remains positive as strengthening economies in the US, Japan and Germany would support shipments from the region.

“May figures are just a blip,” he said. “The hopes for cyclical recovery remains a positive theme, thanks to the strength of G3 economies.”

Data from Japan backed that assessment as manufacturing activity grew at its fastest pace in three months in May.

The world’s third-largest economy grew at its fastest pace in a year in the first quarter, marking the longest period of expansion in a decade. – Reuters