Asia’s Factory Activity Weakens in September

By Leika Kihara

TOKYO (Reuters) – Asia’s factory activity weakened in September due to soft Chinese demand and global economic uncertainty, highlighting a challenging outlook for policymakers seeking to support fragile economies.

Manufacturers in the region might see some relief from recent aggressive stimulus measures by Chinese authorities, including interest rate cuts and liquidity injections into the banking sector.

Japan’s factory activity shrank in September, while Taiwan’s growth expanded at a slower pace, as indicated by purchasing managers’ index (PMI) surveys, reflecting the impact of weak global demand on Asian exporters.

In South Korea, export growth slowed in September, with shipments to the U.S. barely increasing, indicating the fallout from a slowing U.S. economy.

China’s manufacturing sector struggled, with the Caixin/S&P Global manufacturing PMI dropping to 49.3 in September from 50.4 the previous month, marking a low since July last year.

Japan, which relies heavily on exports for economic growth amid weak consumption, saw the final au Jibun Bank Japan PMI dip to 49.7 in September from 49.8 in August, remaining below the 50.0 threshold separating growth from contraction for the third consecutive month.

The PMI survey indicated “muted trends across the manufacturing industry,” according to Usamah Bhatti at S&P Global Market Intelligence.

Taiwan’s PMI was 50.8 in September, down from 51.5 in August, while manufacturing activity in Vietnam, Malaysia, and Indonesia also contracted.

The International Monetary Fund (IMF) expects a soft landing for Asia’s economies as moderating inflation allows central banks to ease policies to foster growth. It predicts regional growth to slow from 5% in 2023 to 4.5% this year and 4.3% in 2025.