Asia’s factory recovery picks up but cost pressures emerge

Asia’s factories stepped up production in March as a solid recovery in global demand helped manufacturers move past the setbacks of the pandemic, although rising costs are creating new challenges for businesses in the region. A series of upbeat factory surveys released on Thursday reinforce market optimism that vaccine rollouts, as well as strong growth in global powerhouses like the United States and China, will help economies emerge from their sharp downturns of 2020.

Japan and South Korea saw factory activity expand in March thanks to solid demand at home and abroad, purchasing manager indexes’ (PMI) showed, offering relief to policymakers facing pressure to speed up a patchy recovery. China’s factory activity in March expanded at the slowest pace in almost a year, though underlying economic conditions remained positive.

The Caixin/Markit Manufacturing PMI, which focuses on smaller firms, dropped to 50.6 in March from February’s 50.9, missing market expectations. The private-sector survey came after Wednesday’s release of the official manufacturing PMI that showed Chinese factories cranking up production after a brief lull during the Lunar New Year holiday.

South Korea’s PMI stood at 55.3 in March, with activity expanding for a sixth straight month. Manufacturing activity also accelerated in Taiwan, Vietnam and Indonesia, the March PMI surveys showed. Malaysian activity continued to decline but at a slower pace.

Asia’s factory recovery picks up but cost pressures emerge, Reuters, Apr 1