Asia manufacturing continues recovery in December

Author: Nurluqman Suratman

2021/01/07

SINGAPORE (ICIS)--Asa's manufacturing activities mostly improved in December, affirming the region's economic recovery despite a recent pick-up in coronavirus infection rates.

China’s official purchasing managers’ index (PMI) for the manufacturing sector remained above the above expansionary threshold despite slipping to 51.9 in December from the year's highest reading of 52.1 in November.

A PMI reading above 50.0 indicates expansion in the manufacturing economy.

"The pace of domestic recovery has been quite solid in recent months, thanks to China’s status as the first in and first out of the pandemic and policy stimulus packages in major developed economies, which significantly boosted domestic production from supply and demand sides, respectively," Japan's Nomura Global Markets Research said.

The private manufacturing PMI survey by Chinese media firm Caixin posted a drop at 53.0 in December from 54.9 in November, amid slower expansions in output and overall new work orders.

"We expect the economic recovery in the post-epidemic era to continue for several months, and macroeconomic indicators will be stronger in the next six months, taking into account the low bases in the first half of 2020," said Wang Zhe, senior economist at Caixin Insight Group.

Japan, India, Taiwan, Indonesia, Thailand, Malaysia, Singapore and Vietnam all posted improvements in their manufacturing sector in December, based on the PMIs by information provider IHS Markit.

In Japan, the improvement in the health of the manufacturing sector was supported by a stabilisation in output levels last month, with the PMI reading at the highest level since April 2018, ending a sequence of 19 straight monthly declines, IHS Markit said.

"According to anecdotal evidence, confidence remained downbeat due to the lingering impacts of the pandemic, although there was evidence that conditions were improving, notably in the automotive sector," it said.

In South Korea, new orders among South Korean manufacturers rose further in December as foreign demand, notably from China and Japan, increased.

Additional pressure on capacity also encouraged South Korean businesses to expand workforce numbers for the first time in 20 months in December, following stabilisation in November.

South Korea's manufacturing PMI was unchanged at 52.9 from November.

In southeast Asia, the Vietnamese manufacturing sector ended 2020 in growth territory as business conditions improved following disruptions caused by a succession of storms in November.

Manufacturing output grew in December as production volumes recovered from the storm-related disruption in the previous month.

Demand at Vietnamese factories also strengthened in international markets, with new export orders rising for the first time in three months.

Focus article by Nurluqman Suratman