Asia's factory activity shrinks as China lockdown impact widens

Cooling market conditions, sustained cost pressures and weak underlying demand, both domestically and internationally, were reportedly pivotal factors contributing to the declines, according to an economist

Reuters
Published : 1 Dec 2022, 04:28 AM
Updated : 1 Dec 2022, 04:28 AM

Factory output slumped widely across Asia in November as slowing global demand and uncertainty over the fallout from China's strict COVID-19 lockdowns weighed on business sentiment, private surveys showed on Thursday.

The results highlighted Asia's darkening economic outlook for 2023, as the lockdowns disrupt international supply and heighten fears of a further slump in its economy, the world's second-largest.

Cooling market conditions, sustained cost pressures and weak underlying demand, both domestically and internationally, were reportedly pivotal factors contributing to the declines," said economist Laura Denman at S&P Global Market Intelligence, which compiles the survey on Japan.

China's Caixin/S&P Global manufacturing purchasing managers' index (PMI) stood at 49.4 in November, up from 49.2 in the previous month but still below the 50 mark, which separates growth from contraction. It has now been below 50 for four consecutive months.

The figure followed downbeat data in an official survey on Wednesday that showed manufacturing activity had hit a seven-month low in November.

Japan's au Jibun Bank PMI also fell, to 49.0 in November from October's 50.7. That was the first contraction since November 2020.

South Korea's factory activity shrank for a fifth straight month in November but the downturn moderated slightly, possibly suggesting the worst was over for businesses.

Still, South Korea's exports in November suffered their steepest annual drop in 2-1/2 years, separate data showed on Thursday, hit by cooling global demand in major markets led by China and a downturn in the semiconductor industry.

Lockdowns in China have hit production at a factory there that is the biggest producer of Apple Inc iPhones. They have also stoked rare street protests across many cities.

The impact of China's woes was felt widely across Asia. Taiwan's PMI stood at 41.6 in November, up slightly from 41.5 in October but remaining far below the 50 mark.

Vietnam's PMI fell to 47.4 in November from 50.6 in October, while that for Indonesia slid to 50.3 from 51.8, the private surveys showed.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher