Asia’s factories slumped in October as global demand for merchandise goods made in the region continues to weaken, with Thailand recording the steepest drop in the S&P Global manufacturing purchasing managers’ index (PMI).
Taiwan’s slump was also a standout, with the PMI dropping to 41.5 in October from 42.2 in September to mark its weakest reading since January 2009.
Falling customer orders and demand are accelerating the decline for Taiwan’s factories, which are trimming production in response. Soaring inflation and interest rates are crimping consumer spending in the US and Europe, bringing to an end a red hot trading boom for Asia that had been super charged by the pandemic.
“Weak domestic and international demand conditions were the main drag on the headline figure with the rate of decline in new orders the sharpest since the initial phase of the Covid-19 pandemic in May 2020,” Shreeya Patel, economist at S&P Global Market Intelligence, said in a statement.
Japan’s manufacturing gauge slipped to 50.7 from 50.8. South Korea’s PMI rose to 48.2 from 47.3, still its fourth consecutive month of contraction. The nation also reported its first exports decline in two years on Tuesday, in yet another sign that the global economy is cooling.
The picture was also soft across Southeast Asia. Thailand saw the region’s steepest drop even as its factory activity remained in expansion territory. Its PMI fell to 51.6 from 55.7 as selling prices rose at their fastest rate on record and global demand for goods deteriorated. Indonesia and Vietnam also reported more sluggish expansion in October. Malaysia’s manufacturing activity saw a deeper contraction.
A reading above 50 indicates expansion from the previous month, while anything below denotes contraction.
A private gauge of China’s manufacturing activities pointed to a deteriorating situation in October as Covid control measures continued to weigh on production and demand, although the pace of decline eased. The Caixin Manufacturing Purchasing Managers’ Index came in at 49.2 for the past month, despite a small pickup from September’s 48.1.
Supply, domestic and overseas demand, and employment in the manufacturing sector all contracted in October, according to a statement by Caixin and S&P Global. The findings are largely in line with that of the official PMI, which tracks larger and more state-owned enterprises and also showed a contraction in activities.
