Asia factory output falls mostly in September on China, advanced economies

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Asia factory output falls mostly in September on China, advanced economies

Workers at Mitchell Aerospace are a manufacturer of light alloy sand castings for the aerospace industry.

The TOKYO Reuters- Asia factory output weakened mostly in September due to slowing demand in China and advanced economies added to the pain from persistent cost pressures, surveys showed on Monday, clouding the region's economic recovery prospects.

In Taiwan and Malaysia, manufacturing activity fell at a slower pace in September compared with August in Japan and Vietnam, as rising raw material costs and the darkening global outlook weighed on corporate sentiment.

The data came after China's factory and services activity data on Friday pointed out that there was further cooling of the world's second largest economy as strict COVID lockdowns disrupted production and dampened sales.

We're seeing economic conditions deteriorate in China, the United States and Europe. That's definitely weighing on Asian manufacturing activity, said Toru Nishihama, chief economist at Dai-ichi Life Research Institute in Tokyo.

Asia is suffering from a slump in global demand, even though supply disruptions may have run its course. In September, the PMI of the Jibun Bank Japan Manufacturing Purchasing Managers' Index dropped to 50.8 from 51.5 in the previous month, marking the weakest growth rate since January of last year.

Japan's PMI survey showed that new orders fell at the fastest rate in two years, while output fell to its lowest point in a year due to weak demand from China and other trading partners.

Joe Hayes, senior economist at S&P Global Market Intelligence, said that the yen is not doing much to bolster export demand and is pushing imported inflation up dramatically and driving domestic price pressures up even further.

Taiwan's PMI hit 42.2 in September, a decrease from 42.7 in August, and is below the 50 mark that separates growth from contraction on a monthly basis.

The PMI of Vietnam fell to 52.5 from 52.7 in August, while the PMI of Malaysia fell to 49.1 from 50.3, according to the surveys.

Soaring inflation has caused the US and European central banks to start interest rate hikes, which have sparked fears of a downturn in global demand that had underpinned Asian exports.

Asia's economic recovery has been hampered by China's slowdown. With few signs that Beijing will ease zero-COVID soon, many analysts think that China's economy will grow by just 3% this year, which would be the slowest since 1976, excluding the 2.2% expansion during the initial COVID hit in 2020.

China's official PMI rose to 50.1 in September from 49.4 in August. Separate data showed that China's manufacturing PMI fell more than expected to 48.1 in September from 49.5 in August.