Global economy: Asian factories are weak despite China’s rebound, fueling fears of global recession

A cyclist passes a factory in the Keihin Industrial Zone in Kawasaki, south of Tokyo, Japan August 18, 2016. REUTERS/Kim Kyung-Hoon

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  • Japan and South Korea’s PMIs slow in June due to supply constraints
  • Taiwan PMI contracts, other Asian PMIs are also weak
  • China’s Caixin Index rises at fastest pace in 13 months
  • Lifting of COVID lockdown in China helps factories recover

TOKYO, July 1 (Reuters) – Manufacturing activity in Asia stagnated in June as many companies were hit by supply disruptions caused by China’s strict COVID-19 containment measures, while risks The sharp economic slowdown in Europe and the United States heightened fears of a global recession.

A series of surveys on Friday showed Chinese factory activity rebounded solidly in June, although a slowdown in Japan and South Korea, as well as a contraction in Taiwan, highlighted the pressure from the breaks. of supply, rising costs and persistent shortages of materials.

China’s manufacturing activity rose to its highest level in 13 months in June, a private survey showed, as the lifting of COVID lockdowns prompted factories to rush to meet robust demand. Read more

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Cancellations of lockdowns in China could ease supply chain problems and allow automakers and other manufacturers to resume operations after suffering severe disruptions.

Some analysts, however, are warning of new headwinds such as growing market fears that aggressive U.S. interest rate hikes to dampen soaring inflation could push the country into recession and weigh on demand. global world.

Tighter policies in many other economies amid strong pressures on consumer prices have fueled fears of a sharp global economic slowdown and rattled financial markets in recent months.

“There is hope that the Chinese economy will recover from a period of weakness. But there is now a risk of a slowdown in the American and European economies,” said Yoshiki Shinke, chief economist at Dai-ichi Life. Research Institute of Japan.

“It will be a showdown between the two, although there is a lot of uncertainty about the global economic outlook.”

The final Purchasing Managers’ Index (PMI) at Jibun Bank Japan Manufacturing slipped to 52.7 in June from 53.3 the previous month, remaining above the 50 mark separating contraction from expansion. Read more

South Korea’s S&P Global PMI also fell to 51.3 in June from 51.8 in May, down for a second month due to the effect of supply constraints and a labor strike. truckers in June.

Separate data showed that South Korea’s exports, seen as an indicator of global trade as the country’s manufacturers are positioned in many parts of the global supply chain, grew at their slowest pace in 19 months in June. Read more

On the positive side, China’s Caixin/Markit manufacturing PMI rose to 51.7 in June from 48.1 the previous month, marking the first expansion in four months. That was well above analysts’ expectations for a rise to 50.1.

The Caixin survey, which focused on more export-oriented small businesses in coastal regions, comes on the heels of official data showing the country’s factory and service sectors broke three months of declines. activity in June. Read more

Taiwan’s S&P global PMI fell to 49.8 in June from 50.0 in May, while Vietnam’s fell to 54.0 in June from 54.7 the previous month.

Blockages in China have hampered regional and global logistics and supply chains, with Japan and South Korea reporting a sharp drop in production.

China’s economy has started to chart a path to recovery from supply shocks caused by strict lockdowns, although risks remain such as weak consumer spending and fears of a new wave of infections.

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Reporting by Leika Kihara Editing by Shri Navaratnam

Our standards: The Thomson Reuters Trust Principles.

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