Asian factories are struggling because of China

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 was 49.5 last month, down from 50.6 in September. A PMI below 50 indicates a contraction 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," said Wang Zhe, an economist at Caixin Insight Group, commenting 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 — 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 as demand slowed. Machinery makers Fanuc and Murata Manufacturing recently reported weaker-than-expected six-month profits as demand from China slumped.

Meanwhile, manufacturing activity in South Korea has contracted 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 for emerging Asia fell sharply. The manufacturing outlook for 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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