BEIJING/TOKYO: Manufacturing activity in Asia’s industrial powerhouses China and Japan gained pace in June, fuelled mainly by improving demand at home, but a long-awaited bounce in exports remained slow in coming.
Manufacturing surveys yesterday confirmed preliminary readings last month that showed factory output expanding across Asia following months of decline in its two biggest economies. But the surveys’ new export indexes, which gauge the strength of overseas demand, showed only tepid growth in a sign that the region has yet to capitalise on an uneven recovery in the eurozone and delayed upturn in the US economy.
China’s final HSBC/Markit purchasing managers’ index (PMI) rose to 50.7, slightly below its preliminary reading, but confirming its first expansion in six months, from 49.4 in May. China’s official gauge, which is geared more towards bigger state-owned firms, hit a six-month high of 51.0.
“The economy continues to show more signs of recovery, and this momentum will likely continue over the next few months, supported by stronger infrastructure investments,” said Qu Hongbin, chief economist for China at HSBC.
The surveys showed export orders growing only marginally, and policymakers in Beijing and the rest of Asia will be looking ahead to US data to confirm that the world’s biggest economy and Asia’s major export market has finally put its weather-beaten start to the year firmly behind it.
In Japan, the Markit/JMMA purchasing managers’ index for June showed factories were already cranking up activity, with its main gauge coming in at 51.5, above the preliminary reading of 51.1 and topping the 50-point mark for the first time in three months. In Indonesia, Southeast Asia’s largest economy, manufacturing activity rose to a record solely on the back of the strength of domestic demand that offset a dip in export orders.
The impact of disappointing exports was on full display in South Korea, Asia’s fourth-largest economy, which unlike China or Japan cannot rely on domestic demand to take up the slack with high household debt weighing on consumer demand and the government cutting back on its spending.
The HSBC/Markit purchasing managers’ index slid to a seasonally adjusted 48.4 in June from 49.5 in May, its worst in 10 months. Separate government data showed exports in June up 2.5 percent from a year earlier, well below a median 5.1 percent forecast in a poll. Reuters
