Asia’s factories reflect north-south divide as delta spreads

An employee works at a textile factory in Nantong, in China's eastern Jiangsu province on July 15, 2021. (AFP file photo)
An employee works at a textile factory in Nantong, in China’s eastern Jiangsu province on July 15, 2021. (AFP file photo)

Manufacturing managers in Southeast Asia saw a slump in activity as the region grapples with one of the world’s worst Covid-19 outbreaks, while North Asia continued to see a pick up as the global economy recovers.

In Southeast Asia, which has emerged as one of the world’s worst-hit pandemic areas in recent weeks, Indonesia’s IHS Markit manufacturing Purchasing Managers Index plunged to 40.1 from 53.5, its worst reading in 13 months. Thailand’s fell to 48.7 from 49.5 — with activity shrinking for a third consecutive month — Malaysia’s reading hovered at 40.1 from June’s 39.9, and Vietnam’s PMI stayed at 45.1 from 44.1.

The Philippines was the only Southeast Asian country in expansionary territory, at 50.4 versus the previous month’s 50.8. A figure above 50 indicates activity is growing, while a number below 50 reflects a contraction.

Manufacturing in Southeast Asia may face even darker days ahead as some governments are enforcing fresh lockdowns to subdue the spread of the delta variant. Factories in Vietnam have been shuttered to meet new requirements, while some of those that have continued to operate are seeing outbreaks among workers. Thailand is also bracing for closures, while industry groups in both countries are seeking help procuring vaccines for their workforces.

Meanwhile, the IHS Markit PMI for Taiwan surged to 59.7 in July from June’s 57.6, while a Japanese gauge from IHS Markit and au Jibun Bank rose to 53 from June’s 52.4, the sixth straight month of expansion. South Korea’s PMI showed continued expansion, at 53 from June’s 53.9, but was the weakest reading since December, with new orders at their lowest level since January.

The readings follow data Saturday that showed the pace of China’s economy recovery continuing to ease, with the official manufacturing purchasing managers’ index for June at 50.4, down from 50.9 and below the 50.8 estimate, while the non-manufacturing gauge slipped to 53.3, in line with expectations.

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