The momentum of manufacturing activity in Asia was seen weakening in June as some countries struggled with rising input costs and the re -implementation of sanctions measures due to a new wave of coronavirus infections.
The surge in raw material prices has prompted manufacturing activity to expand at a slower pace in China and Japan.
This can be seen from the official manufacturing purchasing managers ’index (PMI) in China released on Wednesday. The reading recorded little change at 50.9 in June, from 51 recorded in May.
Higher raw material costs and a shortage of semiconductor chips were among the reasons for the decline in exports in China and Japan, which also saw factory activity grow at the slowest rate in four months in June.
Meanwhile in Vietnam, Malaysia and India, manufacturing activity contracted following the re-imposition of closure measures by the government to curb the new spread of Covid-19 cases.
Malaysia's manufacturing PMI index declined to 39.9 in June, the lowest level in more than a year, from 51.3. Vietnam and India, which have struggled with a recent viral outbreak, slipped below the 50 level separating expansion and contraction.
This suggests that these countries are lagging behind western economies in terms of recovery, thus further reinforcing the view that regional central banks are unlikely to withdraw stimulus in the near future.
