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TOKYO – Strong demand for tech goods fueled widespread growth in factories in Asia in February, but a slowdown in China underscored the challenges facing the region as it seeks a sustainable recovery from the devastating pandemic hit of the coronavirus disease 2019 (COVID- 19).
Global vaccine launches and rising demand provided optimism for a host of companies that had grappled with a cash flow contraction and falling profits for months.
In Japan, manufacturing activity expanded at the fastest pace in more than two years, while South Korea’s exports rose for the fourth consecutive month in February, suggesting that the region’s export-dependent economies were benefiting. strong world trade.
On the other hand, China’s manufacturing activity grew at the slowest pace in nine months in February, hit by an internal COVID-19 outbreak and weak demand from countries under renewed lockdown measures.
“Overall, the softer pace of activity in (Chinese) manufacturing printing today is likely to be temporary, and we expect growth momentum to pick up thanks to a broadening of the recovery in domestic demand and a pickup in demand. global, ”said Erin Xin, an economist at HSBC.
“However, household consumption, while recovering, has not yet fully reached pre-pandemic growth levels due to continued pressure from the labor market.”
China was the first major economy to lead the recovery from the impact of COVID-19, so any sign of prolonged cooling in Asia’s growth engine is likely to be cause for concern.
However, with the global rebound still in the early days, analysts say the outlook is encouraging as companies increased production to replenish inventory in hopes that the vaccine launch will normalize economic activity.
“The recovery in demand for durable goods continues, which is creating a positive cycle for manufacturers in Asia,” said Shigeto Nagai, director of Japanese economics at Oxford Economics.
“As vaccine launches ease uncertainties about the outlook, capital expenditures will gradually increase. That will benefit Japan, which is strong in capital goods exports, ”he said.
China’s Caixin / Markit Manufacturing Purchasing Managers Index (PMI) fell to 50.9 in February, the lowest level since last May but still above the 50 mark that separates growth from contraction.
That was in line with the official manufacturing PMI which showed that manufacturing activity in the world’s second-largest economy expanded in February at the weakest pace since May last year.
Activity in other Asian giants remained dynamic.
Au Jibun Bank Japan’s final manufacturing PMI jumped to 51.4 in February from the previous month’s reading of 49.8, marking the fastest expansion since December 2018, data showed on Monday.
In South Korea, a benchmark for regional exports, shipments rose 9.5% in February from a year earlier for their fourth consecutive month of growth due to continued growth in car and memory chip sales.
India’s manufacturing activity expanded for the seventh consecutive month in February due to strong demand and increased production, although an increase in input costs could affect corporate profits in the future.
The Philippines, Indonesia and Vietnam also saw manufacturing activity expand in February, a sign that the region was gradually recovering from the initial hit of the pandemic. – Reuters
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