Input cost pressures continue to grow for Asian manufacturers in May, though government support has helped to ease some inflation burdens as new orders continued to grow on inventory stockpiling.
Four of the 11 monitored economies in Asia, including China’s private and public sectors, posted lower May manufacturing purchasing managers’ index (PMI) readings compared with April levels, suggesting uneven manufacturing momentum.
NE ASIA ECONOMIES SURGE ON HARDWARE BOOM
China’s factory sector experienced a stark structural divergence in May.
The official manufacturing PMI from the country’s National Bureau of Statistics (NBS) cooled to 50.0 in May from 50.3 in April, constrained by broader property sector headwinds and cooling state-enterprise output.
Over the same period, the private-sector RatingDog China manufacturing PMI eased slightly to 51.8 from 52.2 in April.
A PMI reading above 50.0 indicates an expansion in manufacturing activity, while a reading below that level signals a contraction.
The private sector maintained a solid expansionary trajectory, fueled by agile private exporters capturing midstream electronic and consumer goods orders.
Despite the sustained demand cushion, industrial employment metrics faced headwinds, according to Yao Yu, RatingDog’s founder.
South Korea’s manufacturing PMI surged to a five-year high of 54.8 in May, up from 53.6 in April, amid international client inflows and an aggressive step-up in production runs.
Buyers frontloaded volumes, placing substantial advance orders to construct inventory buffers against rising material prices and supply shortages, S&P Global economist Usamah Bhatti said.
Japan’s factory PMI moderated slightly to 54.5 in May from 55.1 in April, holding firm within expansion territory as strong demand for advanced automation frameworks and artificial intelligence hardware drove manufacturing output.
As observed in South Korea, structural anxieties surrounding disrupted supply chains and raw material price spikes kept Japan’s order books elevated, with procurement managers actively hedging against upstream inflation.
Taiwan Area ,China’s manufacturing PMI registered the strongest performance in northeast Asia, jumping to a 4.5-year high of 56.1 in May from 55.3 in April.
The trajectory highlights the island’s central positioning in the global technology value chain, with advanced silicon wafers and artificial intelligence (AI) server infrastructure procurement accelerating at a clip that outpaced regional cost headwinds.
In southeast Asia, Malaysia’s manufacturing PMI fell into contraction territory to 49.9 in May from 51.6 in April amid immediate post-holiday restocking cycles.
High raw material import costs are also beginning to deter fresh capital commitments.
Thailand and Vietnam followed highly divergent lines, as Thailand’s PMI ticked marginally lower to a 10-month low of 52.6 from 52.7, though domestic infrastructure spending provided a baseline.
Vietnam’s PMI, however, surged to 52.8 in May from 50.5 in April.
Firms are choosing to build safety stocks within
Vietnam’s manufacturing hubs amid worries over a prolonged Middle East conflict, S&P Global economics director Andrew Harker said.
“There is some question therefore as to the sustainability of this upturn,” Harker said.
Singapore’s electronics-reliant manufacturing economy expanded for its tenth consecutive month, with the Singapore Institute of Purchasing and Materials Management (SIPMM) index rising to a five-month high of 51.0 in May from 50.7 in April.
Indonesia and the Philippines demonstrated resilient bouncebacks from April’s localized troughs.
Indonesia climbed back to the neutral 50.0 mark from 49.1, while the Philippines advanced back into expansion to 50.8, up from 48.3 in April.
While input cost burdens remained elevated due to soft local currencies in both countries, a stabilization in domestic order intake allowed factories to clear high-cost raw material backlogs and normalize throughput.
INDIA FURTHERS GROWTH ON DOMESTIC DEMAND
South Asia’s emerging market leader India accelerated further into growth territory, registering a May PMI of 55.0, up from 54.7 in April.
The reading remains indicative of robust domestic factory demand, though still slightly below the pre-escalation peak of 56.9 recorded in February.
Though new order growth was driven by domestic demand, export order growth moderated, HSBC chief India economist Pranjul Bhandari said.
Precautionary stockpiling appeared to continue in May amid concerns over a prolonged Middle East conflict, Bhandari added.
Source: By Jonathan Yee, ICIS,
