China’s factories notched their strongest growth in activity in two years and Japanese firms’ order books rose last month, masking concern about the protectionist leanings of US president-elect Donald Trump and an OPEC-induced crude oil price rally.
Factory surveys produced stronger purchasing manager index (PMI) numbers in Taiwan, China and Vietnam, and while activity in Japan’s factories was still growing, the pace was slower than in October.
Some analysts cautioned that last month’s figures might be as good as it gets, as the effects of stimulus measures in some parts of Asia are wearing off.
“The strength in PMI numbers is unlikely to be sustained as much of it can be explained by previous stimulus measures,” Capital Economics economist Julian Evans-Pritchard said in Singapore.
“We see increased signs of slowdown in domestic economies, particularly in China,” Evans-Pritchard said.
An uncertain outlook for global trade was also worrying Asia’s export-driven economies.
“We are still envisaging a little bit of global trade momentum from where we are now, but there is so much uncertainty at the moment in the world,” Oxford Economics head of Asia economics Louis Kuijs said.
Trump is likely to adopt more fiscal expansion, which should boost US economic growth.
However, “here in Asia, we are still waiting very much to see what the Trump presidency will mean for things like trade policies and trade restrictions,” Kuijs said.
China’s official PMI rose to 51.7 from October’s 51.2, staying above the 50-point mark that separates growth from contraction on a monthly basis. The index was stronger than economists polled by Reuters had expected and matched a level last seen in July 2014.
However, the unofficial Caixin survey showed a more modest increase in activity, perhaps because it focuses on smaller firms which benefit less from government support for the economy.
While growth in activity was slower in Japan, a sub-index for new orders, which measures both domestic and external demand, rose to a 10-month high of 51.1, up from 50.8 in October.
Elsewhere in Asia, India’s factory activity expanded, but growth slowed last month, resulting in the biggest month-on-month decline in its PMI since March 2013.
The index dropped to 52.3 from 54.4 a month earlier.
South Korean factories showed a fourth consecutive month of slowdown underlying a fragile recovery for Asia’s fourth-largest economy.
In Malaysia, where the ringgit has fallen sharply due to capital outflows, the PMI fell to a five-month low, hurt by falls in production and new orders.
In Australia, lower business investment has opened the possibility that the economy shrank last quarter for the first time in almost six years.
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