Asia’s factories squeezed as China’s nascent recovery teeters

Purchasing managers’ indexes (PMIs) for factory powerhouses China, Japan and South Korea showed activity shrinking while Vietnam and Malaysia also struggled with the broadening fallout from a Chinese slowdown.manufacturing PMI fell to 49.5 in October from 50.6 in September, a private sector survey showed on Wednesday, falling back below the 50.0 point threshold that separates growth from contraction.

“Overall, manufacturers were not in high spirits in October,” said Wang Zhe, an economist at Caixin Insight Group, on China’s survey outcome. “The economy has showed signs of bottoming out, but the foundation of recovery is not solid. Demand is weak, many internal and external uncertainties remain, and expectations are still relatively weak.”

The impact of China’s slowdown is being felt in countries like Japan and South Korea, whose manufacturers are heavily reliant on demand from the Asian giant. That came a day after official figures showed Japan’s factory output rose much less than expected in September as demand slowed significantly.

South Korea’s factory activity fell for the 16th straight month while PMIs from Taiwan, Vietnam and Malaysia also showed continued declines in activity.has warned that China’s weak recovery and the risk of a more protracted property crisis could further dent Asia’s economic prospects.

In its World Economic Outlook released last month, the IMF cut next year’s growth estimate for Asia to 4.2% from 4.4% projected in April, and down from 4.6% forecast for this year.

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