China’s manufacturing sector expanded at the fastest rate in a decade last month, new data shows. South Korean and Japanese companies are stabilizing.
Asian factories continued to recover steadily in November thanks to a boom in China as an economic engine, private surveys showed on Tuesday, hoping the region will shake off resistance from the COVID-19 crisis.
However, a global resurgence of coronavirus infections has made the outlook very uncertain and pressures governments and central banks to maintain or step up their massive stimulus programs, analysts say.
China’s factory activity accelerated at the fastest pace in a decade in November, according to a private survey on Tuesday. This is a sign that the world’s second largest economy is recovering to pre-pandemic levels.
The positive results were in line with an official survey showing that activity in Chinese factories grew at the fastest pace in more than three years in November, and growth in the service sector reached a multi-year high.
Back to normal?
“Manufacturing continued to recover and the economy gradually returned to normal as the fallout from the domestic COVID-19 epidemic subsided,” said Wang Zhe, chief economist at Caixin Insight Group.
China’s Caixin / Markit Manufacturing Purchasing Managers’ Index (PMI) rose from 53.6 in October to 54.9, marking its highest level since November 2010.
[Bloomberg]The meter stayed well above the 50 level separating growth from contraction for the seventh straight month.
A steady recovery in global demand also helped Japan’s factory activity near stabilization in November and South Koreas’ fastest acceleration in nearly a decade.
Au Jibun Bank Japan’s final manufacturing PMI hit 49.0 in November, up from 48.7 in the previous month and a provisional 48.3.
The IHS Markit PMI in South Korea rose from 51.2 in October to 52.9 in November. This is the highest value since February 2011 and marks the second month of activity expansion.
Factory activity in Taiwan and Indonesia also increased, a sign that the revival in Chinese demand supported the region’s economy.
However, many analysts remain cautious about the outlook as global and domestic demand is vulnerable to infection trends.
“Japan’s economy likely slowed from July to September, but averted a decline due to a pickup in exports and the impact of government campaigns to support demand,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.
“But the economy could shrink from January to March if households hold back on spending. If service companies, suffering from declining sales, cut spending, it could hurt jobs and investments. “