Slumping export demand slowed factory activity in some of Asia’s biggest economies in August, although China fared better thanks to solid domestic growth, a series of surveys released on Thursday showed.
The Purchasing Managers Indexes showed manufacturing contracted in South Korea and Taiwan as new export orders fell sharply. China’s official PMI increased slightly, the first rise since March, but it also reflected the effects of slowing demand in the United States and Europe. China’s overall PMI rose to 50.9 in August from 50.7 in July, according to government data, a touch weaker than economists polled by Reuters had predicted. The new export orders index dropped to 48.3 from July’s 50.4.
Beijing pinned the blame for the sharp fall in export orders at least partly on the debt crises in advanced economies. The National Bureau of Statistics said the export sector was “facing challenges”.
Taiwan’s PMI dropped to 45.2 in August, the lowest reading since January 2009, which was in the middle of the global financial crisis that crushed world trade. A reading below 50 indicates contraction.
“The west’s deteriorating growth outlook is becoming an increasingly heavy burden to bear,” said Donna Kwok, an economist with HSBC, which sponsors PMI reports in many countries including Taiwan.
HSBC’s PMI figure for China showed factory activity contracted for a second consecutive month, although the decline was less pronounced than it was in July. HSBC’s survey relies more heavily on private companies rather than the large state-owned enterprises that dominate the government’s PMI report. Weak economic growth in the United States and Europe has revived worries they will slip back into recession, which would deal a heavy blow to Asia’s export-driven economies. Data due later on Thursday is expected to show manufacturing contracted in the euro zone and the United States in August.
Most advanced economies have already cut interest rates to near zero, and with government finances constrained, policymakers have limited options for spurring stronger growth. That leaves the big emerging economies as the best hope for propping up global growth. They may not be up to the task.