Weakness in manufacturing bottoms out in Emerging Asia

MANILA, Philippines — Weak but steady growth in the Purchasing Managers’ Index (PMI) for manufacturing in Emerging Asia in December indicates weakness in the region has bottomed out and improvements in the sector can be expected in the coming months, according to London-based Capital Economics.

In a new research brief, the macroeconomy research firm said most PMIs in eight economies in Emerging Asia registered improvements in December over November.

Only the readings for Myanmar and Vietnam fell back, but the PMIs for Korea, Taiwan, Indonesia, Malaysia, Philippines and Thailand registered improvements.

“PMIs for Emerging Asia improved slightly in December, which is consistent with our view that while regional growth remains weak, it has at least bottomed out,” said Capital Economics.

Taiwan and Korea, two of the Philippines’ biggest markets for exports of unfinished goods, have registered strong rebounds in PMIs in December, sustaining gains over the past several months.

Manufacturing activity in China, a major export destination for Emerging Asia economies, also appears to be holding up despite the weaker reading in December at 51.5 over the two-year high of 51.8 in November.

“The strong survey data do suggest growth in China is holding up better than expected, providing some hope for export-focused economies in the rest of the region,” Capital Economics said.