# Asia’s factory activity weakens on global slowdown, cost pressures
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-03
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Asia's Factory Output Weakens as Global Economic
Meta Description: Surveys show worsening manufacturing activity in Taiwan, Malaysia, Japan, India, and Vietnam due to rising costs and darkening global outlook.
URL: https://financedigest.com/asias-factory-activity-weakens-on-global-slowdown-cost-pressureshtml

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By Leika Kihara

TOKYO (Reuters) – Asia’s factory output mostly weakened in September as slowing demand in China and advanced economies added to the pain from persistent cost pressures, surveys showed on Monday, clouding the region’s economic recovery prospects.

Manufacturing activity shrank in Taiwan and Malaysia, and grew at a slower pace in September compared with August in Japan, India and Vietnam, as rising raw material costs and the darkening global outlook weighed on corporate sentiment.

The surveys came after China’s factory and [services activity data on Friday pointed](https://www.financedigest.com/service-the-cfo-why-context-is-worth-80-iq-points.html "Service & The CFO: Why Context Is Worth 80 IQ Points") to further cooling in the world’s second-largest economy as strict COVID lockdowns disrupted production and dampened sales.

We’re [seeing economic conditions deteriorate in China](https://www.financedigest.com/china-equities-weigh-as-em-sees-another-month-of-outflows-iif.html "China, equities weigh as EM sees another month of outflows – IIF"), the United States and Europe. That’s definitely weighing on Asian manufacturing activity,” said Toru Nishihama, [chief economist](https://www.financedigest.com/ecb-should-raise-rates-at-steady-pace-chief-economist-says.html "ECB should raise rates at steady pace, chief economist says") at Dai-ichi Life Research Institute in Tokyo.

While supply disruptions may have run their course, Asia is now suffering from slumping [global demand.”](https://www.financedigest.com/global-factory-activity-weakens-as-demand-falters.html "Global factory activity weakens as demand falters")

The data clouds the outlook for Asia’s recovery from the COVID-19 pandemic, and could add to concerns of a [global slowdown as major central banks](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse billion lifeline offers limited respite to global banks") embark on the most aggressive round of rate rises in decades to tame soaring inflation.

The au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) slumped to 50.8 in September from 51.5 in the prior month, [marking the weakest growth rate since January last year](https://www.financedigest.com/tall-marks-its-25th-year-with-celebration-day.html "TALL Marks its 25th Year with Celebration Day ").

New orders shrank at the fastest rate in two years, while [output posted](https://www.financedigest.com/japans-factory-output-posts-biggest-fall-in-8-months-on-weak-autos-chips-sectors.html "Japan’s factory output posts biggest fall in 8 months on weak autos, chips sectors") its sharpest decline in a year due to weakening demand from China and other trading partners, Japan’s PMI survey showed.

Weakness in the yen is doing little to bolster export demand either and instead is pushing imported [inflation up drastically and drove domestic price pressures](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure") up even further,” said Joe Hayes, senior economist at S&P Global Market Intelligence.

Taiwan’s PMI hit 42.2 in September, down from 42.7 in August and staying below the 50 mark that separates [growth from contraction](https://www.financedigest.com/contract-caterer-compass-expects-2023-profit-growth-to-top-20.html "Contract caterer Compass expects 2023 profit growth to top 20%") on a monthly basis.

The [global economic](https://www.financedigest.com/global-economic-crisis-strangling-progress-for-poor-warns-u-n-development-chief.html "Global economic crisis strangling progress for poor, warns U.N. development chief") slowdown is clouding the outlook even for high-growth industries. [Top electric car](https://www.financedigest.com/top-expensive-car-brands.html "Top Expensive Car Brands") maker Tesla Inc on Sunday announced lower-than-expected electric vehicle deliveries in the third quarter.

While the company said logistical challenges overshadowed its record deliveries, some analysts voiced concern about [demand for high-ticket items due to slowing](https://www.financedigest.com/inpost-sees-stronger-2022-but-warns-of-slowing-demand.html "InPost sees stronger 2022 but warns of slowing demand") global growth.

Vietnam’s [PMI fell to 52.5 from 52.7 in August](https://www.financedigest.com/euro-zone-business-activity-contracted-again-in-august-pmi.html "Euro zone business activity contracted again in August -PMI"), while that of Malaysia slid to 49.1 from 50.3, the surveys showed.

India’s factory growth dipped to a three-month low in September due to a moderation in demand and output, despite [easing inflationary pressures and strong business](https://www.financedigest.com/german-businesses-expect-only-mild-recession-as-disruptions-ease.html "German businesses expect only mild recession as disruptions ease") confidence.

[Soaring inflation](https://www.financedigest.com/stocks-tumble-dollar-rallies-as-soaring-u-s-inflation-implies-an-aggressive-fed.html "Stocks tumble, dollar rallies as soaring U.S. inflation implies an aggressive Fed") has forced U.S. and European central banks to embark on interest [rate hikes](https://www.financedigest.com/uk-economys-unexpected-bounce-spurs-more-boe-rate-hike-talk.html "UK economy’s unexpected bounce spurs more BoE rate hike talk"), stoking fears of a sharp downturn in global demand that had underpinned Asian exports.

[China’s slowdown has also clouded Asia’s](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") economic recovery. With few signs Beijing will significantly ease zero-COVID soon, many analysts expect China’s economy to grow by just 3% this year, which would be the slowest since 1976, excluding the 2.2% expansion during the [initial COVID](https://www.financedigest.com/fda-advisers-back-the-same-covid-vaccine-for-initial-shots-boosters.html "FDA advisers back the same COVID vaccine for initial shots, boosters") hit in 2020.

Data showed on Friday [China’s official PMI](https://www.financedigest.com/dollar-slips-yuan-gains-on-china-pmi-hot-inflation-lifts-euro.html "Dollar slips, yuan gains on China PMI; hot inflation lifts euro") rose to 50.1 in September from 49.4 in August. But separate [data showed China’s](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data") Caixin/Markit manufacturing PMI fell more than expected to 48.1 in September from 49.5 in August.

(Reporting by Leika Kihara; Editing by Ana Nicolaci da Costa)


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