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WORLD ECONOMY Asia’s factory activity shrinks as lockdown impact in China spreads

  • China’s private survey shows ongoing PMI contraction
  • Factory activity shrinks in Japan, South Korea
  • Surveys highlight the darkening outlook for Asia next year

TOKYO, Dec 1 (Reuters) – Factory production plummeted across Asia in November as slowing global demand and uncertainty over the fallout of China’s strict COVID-19 lockdown weighed on business sentiment, private surveys showed on Thursday showed.

The results highlighted Asia’s darkening economic outlook for 2023 as lockdowns disrupt international supplies and fuel fears of a further slump in its economy, the world’s second largest.

Amid the pandemic containment, China’s factory activity shrank in November, a private survey showed on Thursday. The result implied weaker employment and economic growth in the fourth quarter.

Manufacturing activity also contracted in export-dependent economies like Japan and South Korea, and emerging markets like Vietnam, underscoring the mounting damage from weak global demand and stubbornly high input costs, surveys showed.

“Cooling market conditions, ongoing cost pressures and weak underlying demand, both domestic and international, were reportedly key factors contributing to the declines,” said economist Laura Denman of S&P Global Market Intelligence, which compiles the Japan survey.

China’s Caixin/S&P Global Manufacturing Purchasing Managers’ Index (PMI) came in at 49.4 in November, up from 49.2 in the previous month but still below the 50-line separating growth from contraction. He has now been below 50 for four straight months.

The figure followed weak data in an official survey on Wednesday that showed manufacturing activity hit a seven-month low in November.

Japan’s au Jibun Bank PMI also fell to 49.0 in November from 50.7 in October. That was the first contraction since November 2020.

South Korea’s factory activity contracted for the fifth straight month in November, but the slowdown moderated slightly, possibly indicating the worst was over for companies.

Still, South Korea’s exports suffered their sharpest annual decline in 2 1/2 years in November, separate data showed on Thursday, hit by slowing global demand in key markets led by China and a slowdown in the semiconductor industry.

Lockdowns in China have impacted production at a local factory that is the largest maker of Apple Inc (A`L.O) iPhones. They have also fueled rare street protests in many cities.

The effects of China’s woes were widespread across Asia. Taiwan’s PMI came in at 41.6 in November, up slightly from October’s 41.5 but remained well below the 50 mark.

Vietnam’s PMI fell to 47.4 in November from 50.6 in October, while Indonesia’s slipped to 50.3 from 51.8, private surveys showed.

Reporting by Leika Kihara; Edited by Bradley Perrett

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