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Asian manufacturing sector in contraction

Summary:
The latest Asian PMIs point to continued deceleration of growth momentum in the region, but domestic-driven economies are more resilient than export-dependent ones.The average of manufacturing purchasing manager indices (PMIs) for Asia (excluding Japan) came in at 49.6 in June, down from 49.9 in May. This was the second consecutive month in which this measure fell below the 50 threshold and indicates that manufacturing activity in Asia is contracting.China is the largest contributor to the slowdown, but some other export-driven economies, particularly Taiwan and South Korea, have also shown weakened momentum as global demand declines and trade tensions persist.PMIs in domestic-driven economies remain above 50, suggesting continued expansion in economic activity, although momentum also

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The latest Asian PMIs point to continued deceleration of growth momentum in the region, but domestic-driven economies are more resilient than export-dependent ones.

The average of manufacturing purchasing manager indices (PMIs) for Asia (excluding Japan) came in at 49.6 in June, down from 49.9 in May. This was the second consecutive month in which this measure fell below the 50 threshold and indicates that manufacturing activity in Asia is contracting.

China is the largest contributor to the slowdown, but some other export-driven economies, particularly Taiwan and South Korea, have also shown weakened momentum as global demand declines and trade tensions persist.

PMIs in domestic-driven economies remain above 50, suggesting continued expansion in economic activity, although momentum also moderated somewhat in June compared to the previous month, except for the Philippines.

Vietnam and Thailand are turning out to be exceptions to the weakness seen among Asian export-driven economies , with PMI readings rising in both countries in June, especially in Vietnam. In our view, Vietnam is one of the biggest beneficiaries of the ongoing US-China trade tensions. Vietnam has turned out to be one of the main alternative suppliers for goods from China hit by US tariffs.

About Dong Chen
Dong Chen
Dong Chen is senior Asia economist, Pictet Wealth Management. - Twelve years of working experience in macroeconomic research - Extensive knowledge about asset allocation and multi-asset class portfolios - Rich client-facing experiences with high-net-worth clients across Asia - Rigorous training in economics and comprehensive knowledge about Asian economies and business - Strong analytical skills and solid background in statistical/econometric analysis - Strong communication / presentation skills - Native Mandarin Chinese speaker and fluent in English Do not hesitate to contact Pictet for an investment proposal. Please contact Zurich Office, the Geneva Office or one of 26 other offices world-wide.

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