Amid China's slowdown, Asian manufacturing hubs see dip in demand

Asia’s biggest factory hubs saw further easing in demand in August as China’s slowdown weighed on the region and risks piled up in the global economy.

Purchasing managers indexes for Taiwan fell to 42.7 from 44.6 in July -- its lowest since May 2020 -- while South Korea’s fell to 47.6 from 49.8 -- its lowest since July 2020 -- according to S&P Global. Japan’s reading weakened to 51.5 from 52.1.

It was a mixed picture elsewhere in the region. Malaysia’s PMI reading slipped to 50.3 from 50.6, while gauges for the Philippines, Indonesia and Thailand all increased. A reading below 50 indicates a contraction, while anything above that level points to an expansion.

The data add to a highly uncertain environment for the global economy as the world’s two biggest economies move in different directions and central bankers keep up a race to hike interest rates and fight inflation. Much of China’s regional trading partners were already seeing the negative effects of depressed Chinese consumer demand through July exports data, while Southeast Asian economies showed some resilience with essential goods shipments. 

The regional data came after China’s factory activity contracted in August for a second month in a row, according to data released Wednesday. The official manufacturing purchasing managers index rose to 49.4 from 49 in July, as power shortages from a historic drought led risks for producers.