Trade of Asia

Asia’s factories are weak despite China’s growth, which adds to worries about a global recession.

Tokyo (Reuters) -Asia’s manufacturing activity slowed down in June because China’s strict COVID-19 lockdowns made it hard for many companies to get their supplies. People worry about a global recession because of sharp economic slowdown risks in Europe and the United States.

Several surveys released on Friday showed that factory activity in China was strong in June. But a slowdown in Japan and South Korea as well as a contraction in Taiwan showed how much stress supply disruptions, rising costs, and persistent material shortages are putting on the economy.

A private survey showed that China’s manufacturing activity grew at its fastest rate in 13 months in June. This was because COVID lockdowns were lifted, which made factories frantically rush to meet strong demand.

Rolling back China’s lockdowns could fix problems in the supply chain and let automakers and other manufacturers get back to work after major setbacks.

Some analysts, on the other hand, warn of new problems, such as growing market fears that aggressive U.S. interest rate hikes to stop rising inflation will send the country into recession and hurt global demand as a whole.

In recent months, fears of a sharp global economic downturn have grown as many other economies have tightened their policies in response to rising consumer prices. This has shaken the financial markets.

“After some bad times, there is hope that China’s economy will get better.” But now there is a chance that the U.S. and European economies will slow down, “Yoshiki Shinke, who is the head economist at the Dai-ichi Life Research Institute in Japan, said this.”

“It will be a tug-of-war between the two, but the future of the global economy is very uncertain.”

The final Asian Development Bank Japan manufacturing purchasing managers’ index (PMI) slipped to 52.7 in June from 53.3 in the previous month, staying above the 50-mark separating contraction from expansion.

South Korea’s S&P Global (NYSE: SPGI) PMI also went down, from 51.8 in May to 51.3 in June. This was the second month in a row that it went down, because a lack of supply and a truckers’ strike in June hurt the country.

South Korean exports, which are seen as a proxy for global trade because the country’s factories are in many parts of the world’s supply chain, grew at their slowest rate in 19 months in June, according to separate data.

On the bright side, China’s Caixin/Markit manufacturing PMI went up from 48.1 to 51.7 in June. This was the first time in four months that the number went up. Analysts had expected an increase to 50.1, so this was a big surprise.

The Caixin survey focused on small firms with a focus on exports in coastal areas. It came after official data showed that the country’s factory and service sectors stopped losing business for three months in June.

In June, India’s PMI showed that factory output grew at its slowest rate in nine months. This was because rising prices kept putting pressure on demand and production.

Taiwan’s S&P global PMI dropped from 50.0 in May to 49.8 in June, and Vietnam’s dropped from 54.7 in May to 54.0 in June.

Lockdowns in China have messed up logistics and supply chains in the region and around the world. Both Japan and South Korea have reported sharp drops in output.

China’s economy has started to recover from the supply shocks caused by strict lockdowns. However, there are still risks, such as weak consumer spending and fear of a new wave of infections.

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