Asian factory activity hit by global uncertainty, focus on Chinese stimulus By Reuters

By Leica Kihara

TOKYO (Reuters) – Asian factory activity weakened in September as weak Chinese demand and global economic uncertainty pointed to a challenging outlook, private surveys showed, keeping policymakers under pressure to shore up their fragile economies.

Manufacturers in the region could get some relief in the coming months from aggressive stimulus unveiled by Chinese authorities in the past week, including a drop in interest rates and injection of liquidity into the banking system.

Factory activity in Japan contracted in September and expanded at a slower pace in Taiwan, purchasing managers’ index (PMI) surveys showed on Tuesday, underscoring that weak global demand weighed on Asian exporters.

In a sign of the growing fallout from slowing US growth, South Korea’s export growth slowed in September, with shipments to the world’s largest economy barely growing, data showed on Tuesday.

In China, factories struggled to make progress, with the Caixin/S&P Global manufacturing PMI out on Monday showing a drop to 49.3 in September from 50.4 the previous month, marking the lowest since July last year.

It was a similar picture in Japan, which relies on exports to boost economic growth amid subdued consumption. Jibun Bank Japan’s final PMI fell to 49.7 in September from 49.8 in August, remaining below the 50.0 mark that separates growth from contraction for the third straight month.

Japan’s PMI survey showed “reduced trends in the manufacturing industry,” said Usamah Bhatti of S&P Global Market Intelligence.

The PMI for Taiwan was 50.8 in September, down from 51.5 in August. Manufacturing activity fell in Vietnam, Malaysia and Indonesia, the surveys showed.

The International Monetary Fund (IMF) anticipates a soft landing for Asia’s economies as moderating inflation creates room for central banks to ease monetary policies to support growth. Growth in the region is expected to slow from 5% in 2023 to 4.5% this year and 4.3% in 2025.