Factory activity in China expanded at its fastest rate in almost a decade in July, amid signs of a wider recovery from the coronavirus crisis in some of Asia’s biggest economies. The Caixin manufacturing purchasing managers’ index, a private sector survey, beat expectations to hit 52.8 in July, its highest level in more than nine years. A figure of more than 50 indicates expansion compared with the previous month.
The reading reflects a bounce-back of activity after a sharp contraction earlier this year when the country was under lockdown because of the coronavirus pandemic. China’s economy returned to growth in the second quarter and factory activity has increased in each of the past three months. Separate surveys of South Korean and Japanese manufacturing sectors in July also showed the countries had their best performances since February, although neither country has returned to growth.
In Japan, the au Jibun Bank manufacturing PMI rose to 45.2. Respondents to the survey said the improvement was supported by the lifting of a state of emergency in May after a fall in coronavirus cases. In South Korea, the decline in the value of exports slowed further last month, reflecting early signs of recovery in an economy that is seen as a bellwether for trade in the region. Official data showed a 7 percent fall in exports last month compared with the same period in 2019, marking an improvement from declines of more than 20 percent in April and May. The IHS Markit Manufacturing PMI for the country hit 46.9, from 43-4 in June.
South Korea’s export-dependent economy has been partly buffered by electronics exports, particularly computer chips, which have continued to see solid demand and prices amid a boom in online activity – such as content streaming and gaming – fuelled by working from home. China’s factory activity has expanded despite a smattering of local coronavirus outbreaks.
“Overall, flare-ups of the epidemic in some regions did not hurt the improving trend of the manufacturing economy, which continued to recover as more epidemic control measures were lifted,” said Wang Zhe, senior economist at Caixin Insight Group.