Asian factories shake lockdown blues, now face supply headaches

TOKYO (Reuters) – Manufacturing activity in Asia increased in October as emerging economies saw COVID-19 infections subside, but rising input costs, material shortages and slowing Chinese growth The outlook is clouding, business surveys showed Monday.

FILE PHOTO: A staff member works at a nonwoven filter fabric factory, where the fabric is used to make surgical masks, in Taoyuan, Taiwan, March 30, 2020. REUTERS / Ann Wang

Policymakers in the region face pressures on multiple fronts as they pull their economies out of the pandemic-induced doldrums while trying to keep prices in check amid rising commodity costs and rising prices. parts shortages.

Chinese factory activity grew at its fastest pace in four months in October, the Caixin / Markit Private Purchasing Managers Index (PMI) showed on Monday, as COVID-cases dwindled. 19 increased domestic demand.

But a production sub-index showed that production fell for the third month in a row due to power outages and rising costs, in line with Sunday’s official PMI which showed the activity of the factory in October had shrunk more than expected.

“Raw material shortages and soaring raw material prices, combined with electricity supply problems, have created severe constraints for manufacturers and disrupted supply chains,” said Wang Zhe, senior economist at Caixin Insight Group.

Factory activity in October expanded in Vietnam, Indonesia and Malaysia as operations gradually normalized after being hit by closures caused by a spike in COVID-19 infections.

Taiwan saw growth in manufacturing activity accelerate thanks to strong demand for chips, while Japanese factory activity grew at the fastest pace in six months in October, an encouraging sign for the third-largest economy global.

A sign of the uneven nature of the recovery in Asia, however, South Korea’s factory activity grew at the slowest pace in 13 months in October due to lower production and weaker demand. .

Material shortages and delivery interruptions have driven input prices up in Japan for more than 13 years.

“As October’s manufacturing PMIs point to a sharp increase in manufacturing output, the industry is likely to face huge backlogs of orders for many months to come and the resulting supply shortages further down are expected. persist, “said Alex Holmes, Economist for Emerging Asia at Capital Economics.

Jibun Bank Japan’s final PMI index in October rose to 53.2 from 51.5 the previous month, expanding for the ninth consecutive month.

South Korea’s PMI, on the other hand, fell to 50.2 in October from 52.4 in September, although it managed to surpass the 50-mark threshold which indicates an expansion in activity, for a 13th consecutive month.

Vietnam’s PMI rose to 52.1 from 40.2 in September, while that of Indonesia fell from 52.2 to 57.2 according to surveys. Malaysia’s index stood at 52.2, down from 48.1.

Emerging Asian economies have fallen behind advanced economies in recovering from the pain of the pandemic as delays in vaccine deployment and a spike in Delta variant cases hurt consumption and factory production .

Reporting by Leika Kihara; Editing by Sam Holmes

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Natalee Broderick

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