Asian manufacturing activity expanded in June thanks to growth in new export orders for consumer goods – particularly technology products – survey data published on Monday revealed.
Growth slowed in some of the region’s economies, however. Japan and India both saw new orders rise, but at a slower pace of growth, causing concerns over the outlook for the second half.
"While the Future Output Index, a proxy for business confidence, improved slightly in June, it remained significantly below the historical average, reflecting an air of caution among the region's manufacturers," said Bernard Aw, economist at IHS Markit.
Japan remains robust
Japan's economy, the region's second biggest after China, expanded for a tenth-consecutive month although at a slower rate than in May as the headline purchasing managers' index (PMI) slipped to 52.4 from 53.1. A number above 50 indicates expanding activity.
Global demand for consumer goods, such as electronics products, drove growth in the factory sector. South East Asia was a key source of new order wins, the IHS Markit data showed.
Paul Smith, senior economist at Markit, said: "Although the final PMI data for June confirmed that growth slowed, the sector continues to benefit from rising global demand."
Indian growth slows
India also experienced expansion in its manufacturing sector, but also at a slower rate as growth in new work continued to slow. Growth in total order books eased to a four-month low, Markit said.
The headline PMI fell to a four-month low of 50.9 in June from 51.6 in May.
China PMI contracts
Manufacturing in China, Asia's biggest economy, returned to expansion after a deterioration in May, pushing the headline index to 50.4, having dipped to 49.6 in May.
Faster growth in new orders helped lift Chinese PMI, but the outlook component of the index provided the biggest drag on growth as domestic and overseas demand was subdued.
"Based on the inventory trends and confidence around future output, the June reading was more like a temporary rebound, with an economic downtrend likely to be confirmed later," said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group.
South Korea and Taiwan
South Korea's manufacturing index returned to expansion territory for the first time in 11 months, rising to 50.1 in June from 49.2 in May.
Although its rise in new orders was relatively small, it helped boost confidence, with business expectations – the outlook component of the index – reaching a 14-month high.
Taiwan experienced strong growth in new business pushing the headline PMI to 53.3 in June from 53.1 in May.
"Production, total new work and new export sales all rose at faster rates in June amid reports of robust customer demand, particularly from overseas," said Annabel Fiddes at IHS Markit.
South East Asia
Expanding business was also experience in Vietnam and the Philippines.
Manufacturing activity among several of the smaller Asian economies was in decline, however. Malaysia's PMI fell further below the 50-mark, indicating a contraction in business. Indonesia and Myanmar also fell into contraction.