Asian factory output narrows

asian factory

asian factory

Manufacturing growth slowed a little in India and China, while it picked up in South Korea and Taiwan for the month of December, narrowing the gap between the region’s emerging economic giants and developing Asia.

According to Purchasing Manager’s Index (PMI) Data published by HSBC and economics consultancy firm Markit, manufacturing rate grew fastest in seven months in South Korea while it registered strong growth in Taiwan.

India’s Index fell to 56.7 in December from 58.4 in November, while South Korea’s PMI rose to 53.9 in December from 50.2 in November, Monday’s PMI data showed. South Korea’s growth was fuelled by demand rise in China. Taiwan’s PMI also recorded a robust growth to 54.7 from November’s 51.7.

Song Yi Kim – an Asia Economist at HSBC said: “While exports are accelerating again after a recent lull, the labour market is strengthening as well, which should help underpin consumption spending for the coming quarters”. Another Asia Economist – Donna Kwok of HSBC said manufacturing in Taiwan picked up because of recovery of the US and European markets adding: “More importantly, the subsequent creation of new jobs is translating into stronger local demand, as evidenced by the latter’s rising contribution to new order”.

China and India had showed strong manufacturing growth compared to rest of Asia, which witnessed weak or no growth.

The renewed activity in the manufacturing sector in South Korea and Taiwan along with continuous expansion in China and India gives rise to the concern of imminent inflation in the region.

India Chief Economist at HSBC Singapore – Leif Eskesen said that lending rates in India will go up sooner than later. “The PMI numbers show that the economy remains in high gear, but that this is becoming increasingly difficult to reconcile with a comfortable level of inflation,” he added.

The Chinese central bank had hiked rates on Christmas day, the second rise within a span of few weeks to contain inflation. Indonesia recorded December inflation at 6.96 percent, higher than expected and a steep rise to November’s 6.7 percent.

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