Asian factories wobble off lockdown blues, now face resource headaches

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In October, Asia’s industrial activity increased as COVID-19 infections decreased in emerging nations, but growing input costs, material shortages, and sluggish Chinese development cloud the picture, according to business surveys released on Monday.

Policymakers in the area are under pressure on numerous fronts as they try to pull their economy out of the quagmire created by the pandemic while also attempting to keep pricing under control in the face of growing commodity costs and parts shortages.

The private sector Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) revealed on Monday that China’s manufacturing activity increased at its quickest rate in four months in October, as declining COVID-19 cases spurred up domestic demand.

However, due to power constraints and rising prices, a sub-index for output showed production fell for the third month in a row, falling in line with Sunday’s official PMI, which showed manufacturing activity in October decreasing.

“Shortages of raw materials and soaring commodity prices, combined with electricity supply problems, created strong constraints for manufacturers and disrupted supply chains,” said Wang Zhe, senior economist at Caixin Insight Group.

In October, factory activity in Vietnam, Indonesia, and Malaysia increased as operations progressively returned to normal after being disrupted by COVID-19 outbreaks.

Taiwan’s manufacturing activity accelerated in October due to strong chip demand, while Japan’s factory activity grew at its quickest rate in six months in October, indicating that the world’s third-largest economy is on the mend.

In October, India’s factory activity increased at its fastest rate in eight months, pointing to a prolonged economic recovery in Asia’s third-largest economy.

However, in a symptom of the region’s patchwork recovery, South Korea’s manufacturing activity increased at the weakest rate in 13 months in October, owing to lower output and weaker demand.

Material shortages and supply delays pushed up Japan’s input prices to their highest level in over a decade. “While October Manufacturing PMIs point to a strong rise in manufacturing output, industry is likely to be working through huge backlogs of orders for many months to come and resulting supply shortages further afield are set to persist,” said Alex Holmes, emerging Asia economist at Capital Economics.

The final au Jibun Bank Japan PMI in October rose to 53.2 from 51.5 in the previous month, expanding for the ninth consecutive month. South Korea’s PMI, by contrast, fell to 50.2 in October from 52.4 in September, though it managed to stand above the 50-mark threshold that indicates expansion in activity, for a 13th straight month.

Story by : Norvisi Mawunyegah