HONG KONG: Asian factories extended a global manufacturing revival as activity picked up steam in February, though the outlook for many of the region’s export-reliant economies remained uncertain in the wake of U.S. President Donald Trump’s protectionist stance.
Manufacturing surveys for Asia, including for its two biggest economies China and Japan, showed a broadly positive impulse for exports in a welcome sign for many of the companies tapped into the global supply chain.
“Encouragingly, the data indicated that the current upturn in demand remains broad-based across both domestic and international markets, while a further steep increase in purchasing activity raises the prospect of continued production growth in coming months,” said Annabel Fiddes, economist at IHS Markit, referring to Taiwan’s strong PMI reading.
Trump, however, remained the great unknown risk factor for Asia and the rest of the world. Trump’s protectionist stance has rattled global markets, with policymakers and investors remaining on edge until they see more clarity, and specific details, on U.S. economic policies.
Authorities in China, whom Trump last week labelled the “champions of currency manipulation”, can take comfort from a private survey showing factory activity expanded for an eighth consecutive month thanks to a pick-up in export orders.
India also benefited from a rebound in global demand with activity expanding for a second month.
The encouraging factory activity in Asia should also be squared off against rising interest rates in the United States, where any tempering in activity could prove detrimental to some of the region’s globe-trotting manufacturers.
A handful of Federal Reserve policymakers on Tuesday jolted markets into higher expectations for a March U.S. interest rate increase, with comments that suggested rate-setters were worried about waiting too long in the face of pending economic stimulus from Washington.
Similar surveys later in the day are expected to show solid growth in manufacturing in Europe and the United States.