Asian factories stagnate due to slowdown in China and supply restrictions hit

Machinery is seen at a decommissioned metal heat treating factory in an industrial park in Shenyang, Liaoning Province, China, on September 30, 2021. REUTERS / Tingshu Wang

  • Japan’s manufacturing activity grows at the slowest pace in 7 months – PMI
  • South Korea’s activity picks up, but optimism wanes: survey
  • The consequences of China’s slowdown weigh on Asian economies

TOKYO, Oct 1 (Reuters) – Asia’s manufacturing activity stalled overall in September as pandemic-induced factory closures and signs of slowing Chinese growth weighed on the region’s economies, polls showed the Friday.

Countries where large outbreaks of the Delta variant receded saw an improvement in activity, such as Indonesia and India.

But manufacturing activity contracted in Malaysia and Vietnam in September and grew in Japan at the slowest pace in seven months, as chip shortages and supply disruptions added to problems in a region still struggling to shake off the doldrums. impact of COVID-19.

China’s weakening economic momentum dealt a further blow to the region’s growth prospects, with the official Purchasing Managers Index (PMI) on Thursday showing that the country’s manufacturing activity unexpectedly contracted in September due to broader restrictions. in the use of electricity. read more

While the Caixin / Markit private manufacturing PMI performed better than expected after the August slide, growing signs of weakness in the world’s second-largest economy are clouding the outlook for neighboring Asian countries. read more

“While coronavirus restrictions on economic activity may be gradually lifted, the slow pace at which this will happen means that Southeast Asian economies will stagnate for the rest of this year,” said Makoto Saito, an economist at the NLI Research Institute.

Au Jibun Bank Japan’s final manufacturing PMI fell to 51.5 in September from 52.7 in the previous month, marking its slowest pace of expansion since February.

Manufacturers in the world’s third-largest economy faced pressure from pandemic restrictions and increased supply chain disruptions, as well as raw material shortages and delivery delays.

South Korea’s PMI for September rose to 52.4 from 51.2 in August, helped by an expansion in production and new orders.

It remained above the 50-brand threshold indicating expansion in activity for the 12th consecutive month, but continued supply chain disruptions weighed on manufacturers’ business optimism.

Taiwan’s manufacturing activity continued to expand, but at its slowest pace in more than a year.

Taiwan’s PMI index fell to 54.7 in September from 58.5 in August, while Vietnam saw the index unchanged from August at 40.2.

In a ray of hope, Indonesia’s PMI rose to 52.2 from 43.7 in August, while India’s improved to 53.7 in September from 52.3 in the previous month.

“While regional PMIs showed that the disruption from large virus waves in the region is easing somewhat, unfulfilled orders continue to pile up, meaning the resulting shortages in supply chains will persist for some time.” Alex Holmes said. Emerging Asian economist at Capital Economics.

Once seen as an engine of global growth, emerging Asian economies lag behind advanced economies in recovering from the pain of the pandemic, as delays in the launch of vaccines and an increase in cases of Delta variants hurt consumption and industrial production.

Reporting by Leika Kihara; Edited by Ana Nicolaci da Costa

Our Standards: The Thomson Reuters Trust Principles.

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