|Subject||Asia’S Factory Floor Surveys Augur Ill For Exports|
Asia’s export slump doesn’t appear likely to ease anytime soon, if the view from the region’s factory floors is any guide. The latest monthly surveys of purchasing executives at manufacturing companies reveal a largely gloomy view of global demand in April. The surveys, compiled by survey firm Markit Economics, found a weaker outlook for exports among executives in Japan, China, India and South Korea.
That helped pull Markit’s closely watched purchasing managers index, or PMI, down for many countries last month (PMIs measure the relative pace of growth or contraction in factory activity):
Activity in the region’s two largest economies, China and Japan, appears to be contracting;Growth in two of its most export-dependent economies, South Korea and Taiwan, is slowing;
But activity in Asia’s less export-reliant economies, appears to be strengthening: India’s factory expansion is unabated and Indonesia’s is quickening.
That jibes with troubling trade data suggesting recovering global growth isn’t lifting regional exports. Overseas shipments from Asia’s top four exporters – China, Japan, Korea and Taiwan – dropped 2% in the first three months of 2014.
“Asian exports, including Japan’s, have so far failed to respond convincingly to improving demand in the U.S. and the EU,” Frederic Neumann, co-head of Asian economic research at HSBC, said in a note to clients. HSBC sponsors most of Markit’s PMI surveys outside Japan.
After serving the region reliably since the 1960s, Asia’s export engine is stuttering, economists warn. Export growth has typically rebounded in past economic recoveries to its usual double-digit growth rate as Western consumers regain their taste for manufactured imports.
But things have changed. Asia’s labor costs have risen, making the region less competitive. And the recovery in the U.S. appears to be focused less on imports than on more domestic-oriented businesses like building new homes.
The April PMI results reinforce the view that the slump in exports is anything but temporary.
China’s exports fell 3% on year in the first quarter. Its PMI was 48.3 in April, up only slightly from 48 in March. New export orders contracted according to the executives surveyed.
Workers at a factory in Hangzhou, China, making national flags for the 2014 FIFA World Cup.—Agence France-Presse/Getty ImagesJapan’s exports also fell 3% in the first three months of 2014. It’s PMI slumped from 53.9 in March to 49.4 last month – moving from expansion to contraction. New export orders contracted for the first time in eight months, according to Markit.
And while South Korea’s PMI was still in expansion territory, it slowed to 50.2 from 50.4 in March, led by a slight decline in new exports. The nation’s exports grew only 2% in the first quarter, the slowest pace since the middle of last year.
They picked up in April, but the PMI survey suggests more weakness ahead: The sub-index for new export orders fell below 50 for the first time in seven months, which will likely weigh on production activity.
Vietnam, meanwhile, provided a bright spot. With a per-capita income of just over $1,700, it’s wages remain low enough to attract investment from China’s textile producers and shoemakers, as well as higher-end smartphone producers.
Vietnam’s exports climbed 12% on year in the first quarter. Accordingly, Vietnam’s PMI rose to 53.1 in April, from 51.3 in March. “We expect exports to have another stellar year, in contrast to the rest of the region,” said HSBC economist Trinh Nguyen.
Indonesia’s PMI rose to an 11-month high of 51.1, up from 50.1 in March. New export orders rose mildly, while the nation’s large domestic economy helped underpin manufacturing activity.
Source : blogs.wsj.com
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