Asia manufacturing sector deteriorates in August – PMIs
Nurluqman Suratman
01-Sep-2015
(recasts paragraph 16)
SINGAPORE (ICIS)–Asia’s manufacturing conditions
deteriorated in August as effects from the economic slowdown
in China and sputtering exports growth continued to weigh on
production levels, a series of purchasing managers’ indices
in the region showed on Tuesday.
In China, the key market for most petrochemical products in
the region, the official purchasing managers’ index for
August stood at 49.7, down from 50.0 in July, signalling
weakening growth momentum in the country’s giant
manufacturing sector. The August reading is the lowest level
seen in three years.
A reading below 50 signals a contraction.
Additionally, Caixin’s China Composite PMI – which covers
both manufacturing and services – fell to 48.8 in August from
50.2 in July.
Meanwhile, Caixin’s final August PMI for China, which gives
higher weightage to smaller businesses as compared to the
official PMI survey, slipped to 47.3 from July’s reading of
47.8.
Petrochemical market sources told ICIS that the contraction
in the PMI readings were partly because of the shutdowns and
cuts in run rates at several production facilities in North
China in August, including Beijing, Tianjin and Hebei.
The shutdowns and rate cuts were part of Chinese government’s
measures to ensure clean air ahead of a massive 3 September
military parade commemorating the end of World War II.
Chinese media group Caixin said that overall new orders and
new export orders in China both declined at sharper rates
than in July, while lower production requirements prompted
companies to reduce their purchasing activity at the fastest
rate since March 2009.
Furthermore, Chinese manufacturing companies reduced their
workforce numbers for the twenty-second month in a row in
August, according to Caixin.
“Macroeconomic regulations and controls must continue and
fresh reform measures must be introduced. Fine-tuning should
go hand in hand with speedier implementation of structural
reform in order to release the full potential of growth and
lead the market to confidence,” said He Fan, the chief
economist at Caixin Insight Group.
The slowdown in China has weighed heavily on regional
export-led economies and their manufacturing sectors.
South Korea’s exports plunged by 14.7% year on year in
August, its heaviest drop since August 2009, the country’s
trade ministry said on Tuesday. Exports account for about
half of the South Korean economy.
The country’s trade surplus fell to $4.35bn from $7.72bn in
July, with shipments to China, the US and Europe all
contracting.
South Korea’s manufacturing conditions tracked the
contraction in exports, with the Nikkei manufacturing PMI for
the country slipping to 47.9 in August from 47.6 in July,
which points to “a general worsening in operating
conditions”.
“Panellists mentioned a reduction in sales volumes with both
domestic and international clients,” said Amy Brownbill, an
economist at Markit which compiles the Nikkei PMI
survey.
Elsewhere in the region, PMI readings by by Nikkei and Markit
for Indonesia, Malaysia and Taiwan were below 50 in August,
indicating a contraction in manufacturing activities. The PMI
readings for India, Vietnam and Japan, on the other hand,
continued to indicate expansion. (please see table
below)
Nikkei/Markit Manufacturing PMIs |
Aug-15 |
Jul-15 |
|
India |
52.3 |
52.7 |
↓ |
Indonesia |
48.4 |
47.3 |
↑ |
Malaysia |
47.2 |
47.7 |
↓ |
Vietnam |
51.3 |
52.6 |
↓ |
Taiwan |
46.1 |
47.1 |
↓ |
South Korea |
47.9 |
47.6 |
↑ |
Japan |
51.7 |
51.2 |
↑ |
|
|
|
|
China’s Official PMI |
49.7 |
50 |
↓ |
Caixin/Markit Final Manufacturing PMI |
47.3 |
47.8 |
↓ |
|
|
|
|
Denotes Contraction | |||
Denotes Expansion |
|
The Nikkei Japan manufacturing PMI for August rose to 51.7 in
August, up from 51.2 in August, while its seasonally-adjusted
PMI for India slipped to 52.3 from the six-month high reading
of 52.7 in July.
Although manufacturing business conditions continued to
improve in August, the latest data pointed to weaker rates of
expansion for both output and new orders, Nikkei said.
“Growth of Indian manufacturing production waned in August on
the back of softer improvements in both domestic and foreign
demand,” said Pollyanna De Lima, an economist at
Markit.
“A sharp increase in buying levels coupled with a record drop
in stocks of finished goods, however, indicates that output
growth will likely rebound in coming months,” De Lima
added.
With additional reporting by Viola Pan
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