Asia’s output rise belies experts’ ‘peak’ predictions

TRACKING Factories in Asian countries showed resilience as they ramped up production: Survey

Hong Kong, Sept. 1: Asia’s factories cranked up production in August as global demand remained strong, confounding expectations that growth may have peaked, but worries about China’s massive debt and monetary tightening in the West are likely to keep businesses and markets on edge for months to come.

Similar manufacturing activity surveys from Europe and the US later on Friday are expected to show strong growth, too, paving the way for a gradual rollback of the radical stimulus introduced after the global financial crisis.

In China, manufacturing activity accelerated to a six-month high, buoyed by the sharpest increase in new export orders in seven years and higher prices, a private survey showed.

That echoed similarly robust official data on Thursday suggesting the

IN CHINA, manufacturing activity accelerated to a sixmonth high, buoyed by the sharpest increase in new export orders in seven years and higher prices

industrial sector is continuing to prosper from a year-long, government-led building boom. In both cases, economists had expected growth rates to ease. The third quarter is now looking strong enough that China could sustain much of the momentum from its forecast-beating 6.9 per cent growth in the first half of the year, despite a regulatory crackdown on riskier types of financing and debt and a slew of measures to cool its overheating property market.

Indeed, ratings agency Moody’s Investors Service this week raised its growth forecasts for China, South Korea and Japan. “The surveys point to resilient industrial activity last month,” said Julian Evans-Pritchard, China economist at Capital Economics.

But he added: “Investment growth has cooled recently and we anticipate a further slowdown as the impact of tighter monetary conditions continues to feed through. If we are right, the current strength of industrial activity can’t be sustained for long.”

Manufacturing also expanded solidly in Japan as domestic and export orders picked up. The pickup in new business was generally more modest than in China, however, suggesting its economic growth may moderate from an eye-popping 4 per cent annualised rate in the second quarter.

Other Asian electronics producers were also still riding high.

Taiwan’s manufacturing survey saw the fastest growth in four months, while South Korea’s exports beat expectations and posted their longest run of growth in almost six years. South Korea is the first among major exporting countries to publish its monthly trade figures.