Asia’s factory activity expanded in June on solid momentum in the global economy and brightening prospects for semiconductor output. Reuters reports that policymakers hope the region can weather the hit from soft Chinese demand. But cost pressures weighed on manufacturers in countries like Japan, where the weak yen is boosting the price companies pay for fuel and raw material imports.
China’s purchasing managers’ index (PMI) rose to 51.8 in June from 51.7 in May, remaining above the break-even line of 50.0 that separates growth from contraction. It marked the fastest jump in more than three years and exceeded market forecasts of 51.2. The private-sector reading shows China’s manufacturing activity fell for a second month in June and services activity slid to a five-month low.
The surveys show how Chinese firms are ramping up production despite weak domestic demand, which Beijing has failed to reverse with a rescue package for an ailing property sector. In a sign the Asian region is benefiting from solid global demand, South Korea’s factory activity growth quickened in June to the fastest in 26 months on surging new orders. Factory activity also expanded in June at a faster pace than in May in Vietnam and Taiwan.
Japan’s factory activity expanded in June, but at a slower pace than in May, as companies struggled with rising costs due to the weak yen. Japan manufacturing PMI was at 50.0 on the break-even line that separates growth from contraction, after a brief improvement to 50.4 in May. An index gauging Japanese firms’ future output expectations rose to a six-month high thanks to a better medium-term outlook for the car and chip sectors.
Activity in India’s manufacturing sector rebounded last month as output increased on robust demand, leading to the fastest rate of hiring in over 19 years. The International Monetary Fund (IMF) expects Asia’s economies to head for a soft landing as moderating inflation creates room for central banks to ease monetary policies to support growth. It expects growth in the region to slow from 5% in 2023 to 4.5% this year and 4.3% in 2025.
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