The recovery of Asian manufacturing proved to be short-lived. Of the 12 economies tracked by The Nikkei across the region, seven registered slower growth and three saw contractions in May.
Analysts noted that the downturn has much to do with weaker demand from China, whose credit has tightened and construction slackened. The Nikkei ASEAN Manufacturing Purchasing Managers’ Index in May – which tracks the Philippines, Myanmar, Vietnam, Indonesia, Thailand, Malaysia and Singapore – slipped 0.6 point from a month earlier to 50.5. A number of the countries mentioned saw growth in orders slowing down.
Business confidence therefore sank to its lowest in more than four years, while stepped-up purchasing activity, likely driven by sticky inflation in input costs, did not translate into more production.