Cost pressures cast shadow over Asia’s fledgling manufacturing recovery
Asian manufacturers seem to be on firmer ground, with the latest survey data signaling stronger output and orders, but building cost pressures could stoke concerns about inflation. Purchasing managers index data from S&P Global showed improvements in industrial powerhouses like South Korea and China midway through the second quarter. “Asia’s manufacturing recovery looks to be firming by the month," said Maybank economist Erica Tay.
Headline manufacturing PMI numbers for May in China, South Korea and Taiwan were all around two-year highs. “Domestic demand-driven economies such as Indonesia and the Philippines are also seeing buoyant activity in manufacturing," Tay said. A revival in factory orders spurred the strongest rise in manufacturing output in South Korea for nearly three years, S&P said on Monday.
“South Korea’s manufacturing sector appears to have caught a second wind," said Joe Hayes, principal economist at S&P Global Market Intelligence. Better demand at home and abroad drove the surge, with headline PMI indicating a return to growth after signaling contractions for two months. The survey data paints a promising picture, said Hayes, as hiring growth returned and purchasing activity increased.
A measure of China’s factory activity was similarly upbeat. Data from Caixin Media Co. and S&P Global signaled a fourth straight month of accelerated growth in the sector as the market continued to improve.
The headline PMI reached a high not seen since June 2022, said Wang Zhe, senior economist at Caixin Insight Group. Output hit a 23-month high, and businesses turned more optimistic, expressing high expectations for domestic and foreign demand over the following year, he said. In Japan, the manufacturing sector’s health
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