Just like the ray of a light at the end of a long dark tunnel, Asia’s factory pains showed some signs of easing. However, low global demands and fears of a second wave of infection will eventually tame any optimism on the outlook and keep pressure on policymakers to support their ailing economies.
According to a private sector survey, soon after the lockdown measures were lifted in China, the factory activity grew at a faster pace in June. Manufacturing activity also expanded in countries like Malaysia and Vietnam, which eventually points at a slow but steady recovery ahead.
While Japan and South Korea continues to witness a shrink in their manufacturing activity, mostly due to the heavy blow on their export reliant economies, although the pace of their decline slowed.
“The chance of a V-shape recovery in the manufacturing sector appears slim at this stage,” said Joe Hayes, economist at IHS Markit, which compiles the survey.
“We’re still awaiting signs of meaningful improvement in Japan’s manufacturing sector, with the PMI for June failing to stage a substantial recovery.”
In June 2020, China’s PMI rose to 51.2 from 50.7 in May, which is the highest since December 2019. Vietnam and Malaysia also witnessed their PMIs to crawl back above the 50-mark separating the growth from contraction, which is a welcome sign for policymakers who are struggling to combat this unprecedented situation. On the other hand, Japan and South Korea’s PMI rose to 40.1 and 43.4 respectively in June, both remaining far below the threshold of 50.
Also, a Bank of Japan survey showed giant manufacturers’ confidence sinking to levels last seen during the 2009 global financial crisis, reinforcing expectations the country was sinking deeper into recession.