In January, Asia's factory activity fell as China's COVID 19 reopening had yet to offset the slowing of US and European growth, according to surveys on Wednesday February 1, underscoring the fragility of the region's economic recovery.
China's factory activity shrank more slowly in January after Beijing lifted tough COVID 19 curbs late last year, according to a private sector survey.
The slowing of output in Japan and South Korea and the softening input-price pressures gave initial positive signs for Asia, with the pace of contraction in output slowing in Asia and South Korea, according to the surveys.
The worst of Asia's downturn is behind, but the outlook is clouded by weakness in major export destinations like the United States and Europe, said Toru Nishihama, chief economist at Dai-ichi Life Research Institute in Tokyo.
Asian economies need a new growth engine with the recovery from COVID 19 under way. There isn't one so far. China's Caixin S&P Global manufacturing purchasing managers' index fell to 49.2 in January from 49.0 in the previous month, staying below the 50 mark that separates growth from contraction for a sixth month in a row.
The data was compared to a better than expected official PMI survey issued on Tuesday. The Caixin survey centres on small firms and coastal regions, whereas the official PMI focuses on big and state-owned Chinese businesses.
In January, Japan's au Jibun Bank PMI stood at 48.9, unchanged from the previous month, as manufacturers felt the pain from weak global demand.
The Japan PMI survey shows that supplier delays were less prevalent than at any time since February 2021, while input and output price inflation was the slowest in 16 months.
South Korea's factory activity contracted for a seventh month in January. The rate of decline was slower than a month earlier in the month, while orders in South Korea shrank for a seventh month in January.
The immediate outlook for the South Korean manufacturing sector appears challenging, said Usamah Bhatti, economist at S&P Global Market Intelligence.
Firms were confident that global economic conditions would improve and stimulate demand. PMI surveys showed that factory activity in Indonesia and the Philippines increased in January, but shrank in Malaysia and Taiwan.
The International Monetary Fund raised its global growth outlook slightly in 2023 on surprisingly resilient demand in the United States and Europe and the reopening of China's economy after Beijing abandoned its strict pandemic controls.
In 2023, global growth would still be 2.9 per cent from 3.4 per cent in 2022, and the world could easily fall into recession, according to the IMF.