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Think tank sees sluggish growth in Asia factories
MANILA, Philippines — Growth in the manufacturing sector in Emerging Asia economies likely remained sluggish in November in line with moderate expansions in advanced and export-driven economies in the region, according to London-based Capital Economics.
In a research paper, the macroeconomy research firm said most emerging economies in Asia may report better Purchasing Managers’ Index (PMI) results for November this week as October data already indicate improved performance in export-driven economies in the region.
The headline PMI provides a quick overview of the health of the manufacturing sector based on the weighted average of five indicators: new orders, output, job creation, supplier delivery times and inventories.
Capital Economics noted that IHS Markit PMI readings for Korea and Malaysia already picked up in October. Growth in China, meanwhile, rose to a two-year high.
“That suggests that growth in China continued to pick up, providing some hope for export-focused industry in the rest of the region,” Capital Economics said.
Factory activity in Emerging Asia, it said, will also track the subdued performance in advanced economies.
“We suspect the November PMIs will nudge up, but a significant improvement is unlikely. This would fit with PMIs for the advanced economies. A weighted-average of preliminary manufacturing PMIs for the US and the euro zone and the flash PMI in Japan nudged up from a low level,” the firm said.
“Looking ahead, any improvement is likely to be slow going. Our forecast for continued weakness in global growth implies the region’s manufacturers will remain in the doldrums,” it said.
Export growth in Asia can also be expected to be sluggish in the coming months as the so-called “phase one” deal between the US and China cannot be expected to to have material progress soon.
The so-called phase one trade deal involves the rollback of some the tariffs imposed on Chinese goods exported to the US.
But so far, US and China has not yet agreed on the specifics such as the size of the tariffs or the schedule of the rollback.
Source: https://www.philstar.com/business/2019/12/02/1973420/think-tank-sees-sluggish-growth-asia-factories#IPQ5t3uJvQdsxRcc.99