According to surveys and data released on Monday, factory activity in many Asian economies shrank in March, although there were some encouraging signals in China and South Korea. These findings provide a mixed image of the once rapidly growing major generator of the global economy.

According to a private survey released on Monday, China’s Caixin/S&P Global manufacturing purchasing managers’ index (PMI) increased to 51.1 in March from 50.9 the previous month. This was the quickest expansion in 13 months, and company optimism reached an 11-month high.

The results add to an official PMI survey that was made public on Sunday, which indicated that industrial activity in China increased for the first time in six months.

For Beijing and investors across the world, the recovery in China, which is finding it difficult to mount a robust economic rebirth in part because of a protracted real estate crisis, is encouraging.

According to unrelated data, South Korea’s exports increased 3.1% in March compared to the same month last year, the sixth consecutive month of growth because of the strong demand for chips.

Furthermore, the central bank’s tankan survey revealed that while confidence among large manufacturers in Japan soured, optimism among companies in the services sector reached a record high in the first quarter.

However, most of Asia, including export giants South Korea and Japan as well as Taiwan, Malaysia, and Vietnam, had low levels of manufacturing activity.

The final au Jibun Bank PMI for Japan was 48.2 in March, up from 47.2 in February—which represented the quickest rate of contraction in more than three and a half years—and the highest level since November.

However, the poll revealed that activity fell for the tenth consecutive month as new export orders fell, showing a downturn in sentiment in important markets such as China and North America.

The PMI dropped to 49.8 in March from 50.7 in February, reflecting a decline in domestic demand that offset strong international sales. South Korea’s manufacturing activity also declined in March.

The weak PMI results underscore the difficulty facing the region’s policymakers as they contend with sporadic indications of a revival in global demand and uncertainty around the timing of interest rate cuts by the US Federal Reserve.

“China’s exports are picking up a bit but that’s because their goods are cheap. That means other Asian countries must compete with China for demand that’s not growing,” said Toru Nishihama, chief emerging market economist at Dai-ichi Life Research Institute.

“With no clear driver of global growth, it’s hard to paint a rosy outlook for Asia,” he added.

According to the polls, Taiwan’s PMI dipped from 48.6 in February to 49.3 in March, while Vietnam’s fell from 50.4 to 49.9 and Malaysia’s from 49.5 to 48.4.

In contrast, the polls indicated that manufacturing activity increased in March in Indonesia and the Philippines.

The IMF predicted in updated projections released in January that Asia’s economy would grow by 4.5% this year, fueled by strong demand in the United States and anticipated stimulus measures in China.

However, it stated that economic recovery will differ throughout countries, with growth in Japan probably slowing to 0.9% compared to an anticipated 6.5% expansion in India. China’s GDP is predicted by the IMF to grow by 4.6% this year, down from 5.2% in 2023.

(Adapted from USNews.com)

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