Asia manufacturing continues recovery in Apr amid improved external demand

Author: Nurluqman Suratman

2021/05/03

SINGAPORE (ICIS)--Asia's manufacturing sector continued to recover in April on improved operating conditions with foreign demand expected to support near-term growth in new orders.

In China, the official manufacturing purchasing managers' index (PMI) dropped to 51.1 in April from 51.9 in March, remaining above the 50.0 threshold which separates expansion and contraction.

The drop in the April PMI was mainly due to the contraction in the production and new orders sub-indices, which fell visibly to 52.2 and 52.0, respectively, in April from 53.9 and 53.6 in March.

Manufacturing growth was constrained by Beijing’s antipollution measures under its carbon neutrality environmental campaign, a high base as a result of earlier-than-usual resumption of economic activity following the Lunar New Year holiday, and supply shortages of some key intermediate goods such as microchips, according to Nomura Global Markets Research.

"We expect the official manufacturing PMI to rebound slightly to around 51.2 in May and will likely stay around 51.0 through the remainder of this year," it said.

In Japan, au Jibun Bank’s PMI rose to 53.6 in April from 52.7 in March as new orders expanded at the fastest pace in 38 months.

However, manufacturers in Japan noted ongoing difficulties in sourcing raw materials due to global shortages as well as some disruption caused by the Suez Canal blockage.

South Korea and Taiwan both saw their manufacturing sectors remaining in expansion last month as foreign demand improved and boosted export sales, according to financial information services provider IHS Markit.

The Taiwan manufacturing PMI climbed further in April, rising from 60.8 in March to 62.4. This marked the highest reading since March 2010.

The April manufacturing PMI for South Korea extends the current sequence of expansion to seven months, and highlighted a sustained turnaround for its manufacturing sector since the pandemic-related disruption last year.

In southeast Asia, Malaysia and Indonesia both recorded a strong improvement in manufacturing operating conditions in April.

Malaysia's manufacturing PMI rose from 49.9 in March to 53.9 in April, the strongest expansion recorded since July 2012.

Indonesia's manufacturing PMI posted 54.6 in April, up from 53.2 in March and registering a new record high for the second successive month as total new orders were boosted by a return to growth of new business from abroad.

Thumbnail photo: A staff member works at a workshop in China's Guangdong province (Source: Xinhua/Shutterstock).

Focus article and interactive by Nurluqman Suratman