Asia’s factories struggle for growth as Japan falters, China unsteady

Asia’s factories struggle for growth as Japan falters, China unsteady

Asia’s major manufacturing economies struggled to claw their way out of decline in February with Japan particularly squeezed by a steeper fall in demand while an uneven recovery in China overshadowed some signs of improvement elsewhere in the region.

A raft of business surveys released on Friday highlighted a patchy performance across Asia with Japan’s manufacturing purchasing managers’ index (PMI) showing factory activity falling at the fastest pace in more than three years.

There were more mixed signals out of China with the government’s official PMI showing factory activity continuing to fall, a contrast to a slight pick up seen in the private-sector Caixin PMI.

READ: Japan’s Feb factory activity extends decline as conditions worsen

“February PMI data indicated another month of deteriorating operating conditions in the Japanese manufacturing sector,” said Usamah Bhatti at S&P Global Market Intelligence.

“Depressed demand in domestic and international markets continued to weigh on sector performance, as both production and new orders fell at the strongest rate for a year.”

Weakness in Japan

Worryingly, recent data suggest the weakness seen in Japan in the second half of last year has extended into the first quarter of 2024, complicating the Bank of Japan’s task as it looks to exit ultra-easy monetary policy.

Japan unexpectedly slipped into recession in the fourth quarter and lost its title as the world’s third-largest economy to Germany as consumer and business spending weakened.

READ: Japan slips into recession, Germany now world’s third-biggest economy

Its PMI followed official Japanese data this week that showed factory output falling at the fastest pace since May 2020, weighed by a downturn in motor vehicle production.

China’s patchy performance comes amid signs the world’s second-largest economy is tentatively finding its footing after a deep slump caused by its property sector woes.

Investors are looking

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