Asian factories shake off supply headaches but Omicron presents new risks

An employee measures a newly manufactured ball mill at a factory in Nantong, Jiangsu
FILE PHOTO: An employee measures a newly manufactured ball mill at a factory in Nantong, Jiangsu province, China June 28, 2019. REUTERS/Stringer

December 1, 2021

By Leika Kihara

TOKYO (Reuters) – Factory activity in Asia grew in November as supply bottlenecks eased, but rising input costs and fresh weakness in China dampened the region’s outlook for an early and sustained recovery from the crippling pandemic.

The newly discovered coronavirus variant Omicron has also emerged as a new worry for the region’s policymakers, who are already grappling with the challenge of getting their economies out of the doldrums. while trying to contain inflation amid rising commodity costs and spare parts shortages.

Factory activity in China eased back into November, Caixin/Markit Private Manufacturing Purchasing Managers’ Index (PMI) showed on Wednesday, driven by soft demand and rising prices. harmful to manufacturers.

Findings from the private sector survey, which focuses more on small businesses in coastal regions, contrasted with results in Tuesday’s official China PMI showing manufacturing activity. unexpectedly increased in November, albeit at a very modest pace.

“Supply-side constraints are eased, especially with the easing of the energy crisis,” said Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data release. , has accelerated the rate of production recovery.

“But demand is relatively weak, held back by COVID-19 and rising product prices.”

Outside of China, however, factory activity appears to be recovering with PMIs showing expansion in countries from Japan, South Korea, India, Vietnam and the Philippines.

Japan’s PMI rose to 54.5 in November, up from 53.2 in October, the fastest expansion in nearly four years.

South Korea’s PMI rose to 50.9 from 50.2 in October, holding above 50 indicates an expansion of activity for the 14th consecutive month.

However, output in South Korea fell for a second straight month as Asia’s fourth-largest economy struggled to regain full momentum in the face of persistent supply chain disruptions.

“Overall, with new export orders flooding into countries previously affected by the Delta outbreak and continued disruption to still-active supply chains, there are plenty of opportunities to opportunity to continue the recovery in the region’s industry,” said Alex Holmes, emerging Asia economist at Capital Economics.

India’s manufacturing activity grew at its fastest pace in 10 months in November, fueled by strong demand.

Vietnam’s PMI rose to 52.2 in November from 52.1 in October, while that of the Philippines increased to 51.7 from 51.0.

Taiwan’s manufacturing activity continued to expand in November but at a slower pace, with the index reaching 54.9 versus 55.2 in October. The picture was similar for Indonesia, where the PMI declined. down to 53.9 from 57.2 in October.

The November surveys likely do not reflect the spread of the Omicron variant which could put further pressure on supply chains disrupted by the pandemic, with many countries imposing new border controls to self-lockdown.

(Reporting by Leika Kihara; Editing by Sam Holmes) Asian factories shake off supply headaches but Omicron presents new risks

Bobby Allyn

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