It’s fair to say that manufacturing activity across Asia remained in the doldrums in June.
PMI gauges released earlier today have largely disappointed. In China, the government’s official gauge for June remained steady at 50.2, missing expectations for an increase to 50.3, while the separate HSBC-Markit survey, a gauge of small and medium sized firms, remained entrenched in contractionary territory at 49.4.
While the news on Japan was reasonable, the Nikkei-Markit PMI gauge rose to 50.1, 0.2 points higher than the preliminary flash estimate released late last month, the performance elsewhere was poor.
In South Korea manufacturing activity deteriorated sharply, falling to 46.1 from 47.8. The contraction was the sharpest recorded since September 2012. In Taiwan, the news was equally unimpressive. The nation’s PMI index slid to 46.3 from 49.3 with the reading also the lowest seen since September 2012. While activity continued to expand, the acceleration in Vietnamese manufacturing activity slowed with the PMI gauge dropping to 52.2 from 54.8, marking a three-month low.
Making those results look good, Australia’s Ai-Group PMI reading plummeted to 44.2 from 52.3 in May. Not only was the contraction the fastest recorded in over two years, at 8.1 points, the monthly decline was the largest since December 2009.
The chart below shows the recent trend in Asian manufacturing activity.
The trend is hardly encouraging and suggests global demand remains soft. If this is to be reversed growth in the world’s largest economies, the US, China, Eurozone and Japan, will need to accelerate in the second half of the year.