Weak demand from China also weighed on production at Asian factories in October.
The October Purchasing Managers' Index (PMI) showed that manufacturing activity in major economies such as China, Japan, and South Korea all contracted. China's PMI last month was 49.5 points, down from 50.6 points in September. A PMI below 50 indicates a decline in manufacturing activity.
The data cast a shadow over hopes of a recovery in the world's second-largest economy. "Overall, manufacturers did not have a positive sentiment in October. China's economy has shown many signs of bottoming out, but the recovery foundation is still not solid. Demand remains weak, and domestic and foreign uncertainties remain. The outlook is also relatively gloomy," Wang Zhe, an economist at Caixin Insight Group, commented on the PMI results.
The impact of China's economic slowdown is most evident in Japan and South Korea, two major manufacturing countries that rely heavily on demand from China.
Workers at an aluminum factory in Shandong (China). Photo: Reuters
Manufacturing activity in Japan has contracted for five straight months, with factory output rising less than forecast in September due to slowing demand. Machine tool makers Fanuc and Murata Manufacturing recently reported weaker six-month profits due to falling demand from China.
Meanwhile, manufacturing activity in South Korea has declined for 16 consecutive months. PMIs in Taiwan, Vietnam and Malaysia all fell in October.
In India, manufacturing slowed for a second straight month as weak demand and rising raw material costs weighed on business confidence.
"Overall, the October PMI of emerging Asia fell sharply. The manufacturing outlook in the region remains bleak in the short term, with high inventories and weak external demand," said Shivaan Tandon, an economist at Capital Economics.
The International Monetary Fund (IMF) warned last month that China’s weak recovery and its property crisis could further dampen Asia’s economic outlook. In its World Economic Outlook Update last month, the IMF cut its growth forecast for Asia to 4.2%, down from its previous two reports.
Ha Thu (according to Reuters)
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