Asia’s factories end 2023 on soft note amid fragile China recovery

Resident buildings and offices are seen in Shenzhen, Guangdong Province, China, Sept 6, 2019.  REUTERS/Athit Perawongmetha/File photo

SYDNEY  —Asia’s factory activity weakened in December, portending a shaky start for the region’s manufacturing powerhouses in 2024 as China’s patchy economic recovery impeded a broader revival in demand.

A range of purchasing managers’ indexes (PMIs) published by S&P Global on Tuesday showed factory activity continuing to decline in most Asian economies at the end of last year and confidence broadly sagging.

The struggles for Asia’s tech-heavy economies persisted with South Korean factory activity dipping back into decline and Taiwan extending its contraction for the 19th straight month, the PMIs showed.

China’s Caixin PMI showed an unexpected acceleration in activity in December, although this contrasted with Beijing’s official PMI released on Sunday that remained in contraction territory for the third straight month.

READ:  China factory activity growth accelerated in Dec – Caixin PMI

The mixed economic prospects for China continue to cloud the outlook for its major trading partners.

“Overall, the economic outlook for (China’s) manufacturing sector continued to improve in December, with supply and demand expanding and price levels remaining stable,” Wang Zhe, Senior economist at Caixin Insight Group said.

“However, employment remained a significant challenge, and businesses expressed concerns about the future, remaining cautious in areas including hiring, raw material purchasing, and inventory management.”

Beijing has in recent months introduced a series of policies to shore up a feeble post-pandemic recovery, but the world’s second-largest economy is struggling to gain momentum amid a severe property slump, local government debt risks and soft global demand.

Elsewhere in Asia, PMIs showed activity in Malaysia’s and Vietnam’s factory sectors remained in contractionary mode, although it accelerated slightly in Indonesia.

READ: India’s factory growth eased in September but remained strong -PMI

India’s PMI for last month will be released on Wednesday and Japan’s is due on Thursday.

While Asia’s December PMIs were mostly downbeat, other recent indicators point to signs the region’s post-pandemic recovery is starting to gain traction.

Singapore’s gross domestic product sped up in the December quarter from a year earlier, helped by firmer construction and manufacturing, data showed on Monday.

READ: Singapore’s Q4 GDP growth speeds up

South Korea’s exports also perked up in December albeit at a slower pace as weaker Chinese demand offset robust global sales for semiconductors, data showed on Monday.