‘Worst over for Asian manufacturing’

Although still weak, manufacturing conditions across Asia recovered in June, hinting that the worst may be over for industries, said London-based think tank Capital Economics.

In its latest Purchasing Managers’ Indexes (PMIs) for the eight economies covered by its Emerging Asia service, improvements were registered in June from April and May when virus-related lockdowns were most severe.

These economies include Taiwan, Korea, Thailand, Vietnam, the Philippines, Malaysia, Myanmar and Indonesia.

Most readings remained below 50, which separates expansion and improving business condition from contraction and deterioration of operations.

In June, improvements were fastest in Vietnam, Philippines, Indonesia, Malaysia

and Myanmar.

“The largest changes were in the Philippines and Indonesia. This was likely due to the later lifting of virus-related restrictions, which means the boost from opening up was concentrated in June,” Capital Economics said.

In Indonesia’s case, manufacturing conditions rebounded from a “very depressed level” and the reading was still the region’s lowest.

Malaysia and Vietnam recorded a strong rebound. In Thailand, there was recovery but not as strong as the others.

In Korea and Taiwan, where lockdowns were avoided in the first place, readings in June nudged up after bottoming out in May.

“It appears that the worst has passed for industry,” Capital Economics said.

“Bringing this all together, PMI readings suggest that a further easing of lockdown restrictions and a nascent recovery in external demand have helped improve conditions for manufacturers.”

Capital Economics noted that while manufacturing conditions in the region can be expected to continue improving gradually alongside the recovery in demand, output growth will remain “well below normal levels for many months to come” as domestic and global demand remain depressed.