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AlwaysFree: Asian Countries Manufacturing Sectors Showing Signs Of Lesser Constraint


Asia’s manufacturing sector constraint showing signs of loosening in June, as China’s factory activity rebound offers hope to the region that the worst is already left behind. However, the fear of second-wave outbreak and sluggish global demand is still drowning the optimism, also alerting policymakers to support the feeble economy. 

Broad improvements in manufacturing sectors across Asia is showing in June business survey series after hit the ground in April and May. Some markets show a little growth while others declining pace is slowing down. China’s factory activity is speeding up in June after lockdown measures eased, as showing in the Caixin/Markit PMI. Malaysia and Vietnam manufacturing activity also heightened, showing a slow but steady recovery. India’s contracting manufacturing activity is slowing down after three-consecutive months as percentages of output contraction and new orders gradually lessen. While in South Korea and Japan, manufacturing activity still declining, but at a softer rate. 

The latest IMF forecast expects the global economy to contract by 4.9% in 2020 and increased by 5.4% in 2021.

Joe Hayes, an economist at IHS Markit, said the chance of a V-shape recovery in the manufacturing sector appears slim at this stage and hoped the meaningful improvement in Japan’s manufacturing sector occurs, with June’s PMI failing to shows substantial recovery. 

The coronavirus pandemic has infected more than 10 million people worldwide and killed more than 500,000. The newest outbreak in various places has alerted governments to rethink the lockdown measurement ease and concerning about the worst second wave. 

China’s PMI from Caixin/Markit slightly up from 50.7 in May to 51.2 in June, showing highest reading since December 2019, followed by the government PMI with similar figures. Malaysia and Vietnam also have seen their PMI readings slightly above the 50.0 thresholds, showing a little light for the country’s policymaker to fight against the pandemic-induced crisis. 

Even though the improvement is showing, analyst said that any economic recovery in the region is expected to be slow, even for China. While the countries’s export order shrank slowly, the employment rate worsened and showing fragile recovery. China’s overall manufacturing demand is recovered at a fast rate, but overseas demand is straggling. 

Japan’s PMI in June up to a seasonally adjusted 40.1, while South Korea’s slightly up to 43.4, both are still struggling below the threshold level. Bank of Japan surveys on the big manufacturer, showing confidence dived to a level similar to the 2009 global financial crisis, worrying over the speculation that the country is sinking deeper into recession. If demands are not recovered, the unemployment rate will rise and delay Japan’s economic recovery, leading to an L-shape curve.

Tags: All Products,AlwaysFree,Asia Pacific,China,English,Japan,Korea,Malaysia,NEA,SEA,Vietnam

Published on July 2, 2020 4:37 PM (GMT+8)
Last Updated on July 2, 2020 4:37 PM (GMT+8)