Asia factory activity rebounds in November

Asia factory activity rebounds in November

TOKYO Reuters- Asian factory activity increased in November as supply bottlenecks slowed but rising input costs and renewed weakness in China dampened the region's prospects for an early, sustained recovery from the Pandemic.

The newly detected Omicron coronaviruses have been a worry for policymakers who are struggling to get out of the doldrums while trying to tame inflation due to rising commodity costs and parts shortages.

China's factory activity fell into contraction in November, the private Caixin Markit Manufacturing Purchasing Managers' Index PMI showed on Wednesday, as soft demand and higher prices hurt manufacturers.

The findings from the private survey, which focuses more on small firms in coastal regions, stood in contrast to those in China's official PMI on Tuesday that showed manufacturing activity unexpectedly rose in November, although at a very modest pace.

The pace of production recovery was quickened by relaxation of the supply side constraints and the easing of the power crunch, said Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data release.

Demand was relatively weak, suppressed by the COVID 19 epidemic and rising product prices. Factory activity seemed to be on the mend with PMIs showing expansion in countries ranging from Japan, South Korea, Vietnam and the Philippines.

Japan's PMI went to 54.5 in November, an increase from 53.2 in October, the fastest expansion in nearly four years.

South Korea's PMI went up to 50.9 from 50.2 in October, holding above the 50 mark threshold that indicates expansion in activity for a 14th straight month.

South Korea's output shrank for the second consecutive month, as Asia's fourth largest economy struggles to regain some momentum in the face of persistent supply chain disruptions.

With new export orders flooding back to countries previously hamstrung by Delta outbreaks and the disruption further down the supply chain still working through, there is a chance for a rebound in regional industry, said Alex Holmes, emerging Asia economist at Capital Economics.

Taiwan's manufacturing activity increased in November, but at a slower pace, with the index hitting 54.9 compared to 55.2 in October. The picture was similar for Indonesia, where PMI fell to 53.9 from 57.2 in October.

The November surveys did not reflect the spread of the Omicron variant that could add more pressure on the pandemic-disrupted supply chains, with many countries imposing new border controls to seal themselves off.