Thursday, December 1, 2022

Asia's factory activity is contracting as the impact of China's lockdown grows

Asia's factory activity shrinks as China lockdown impact widens

 TOKYO:According to private surveys released on Thursday, business sentiment was weighed down in November by slowing global demand and uncertainty over the consequences of China's strict Covid-19 lockdowns. As a result, factory output fell significantly across Asia.

The results showed that Asia's economic outlook was getting worse for 2023 because the lockdowns made it hard to get supplies from other countries and made people more worried that the world's second-largest economy would fall again.

A private survey revealed on Thursday that China's factory activity decreased in November despite the pandemic restrictions.The outcome suggested that employment and economic expansion would be lower in the fourth quarter.

According to surveys, export-dependent economies like Japan and South Korea and emerging nations like Vietnam also saw a decline in manufacturing activity, highlighting the growing damage caused by low global demand and stubbornly high input costs.

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

In November, China's Caixin/S&P Global manufacturing purchasing managers' index (PMI) reached 49.4, up from 49.2 the month before, but still below the 50 threshold, which distinguishes expansion from contraction.For the past four months, it has been below 50.

The report came in the wake of gloomy data from an official survey released on Wednesday, which revealed that manufacturing activity had fallen to a seven-month low in November.

Additionally, Japan's au Jibun Bank PMI decreased from 50.7 in October to 49.0 in November.Since November 2020, that was the first contraction.

In November, factory activity in South Korea decreased for the fifth month in a row, but the decline slowed slightly, possibly indicating that the worst was over for businesses.

However, cooling global demand in major markets led by China and a decline in the semiconductor industry contributed to South Korea's November exports suffering their steepest annual drop in two and a half years, according to separate data released on Thursday.

Production at an Apple Inc. iPhones-producing factory in China has been disrupted by lockdowns.Additionally, they have stoked occasional street protests in numerous cities.Asia felt the effects of China's problems widely.Taiwan's PMI remained at 41.6 in November, up somewhat from 41.5 in October yet staying far beneath the 50 imprint.

According to private surveys, Vietnam's PMI decreased to 47.4 in November from 50.6 in October, while Indonesia's PMI decreased to 50.3 from 51.8.

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