Asia’s manufacturing sector slumped further in July as weak global demand and lingering uncertainty over US tariffs dampened business sentiment, private sector surveys revealed on Friday, casting doubt over the region’s fragile recovery prospects.
The downturn preceded recent trade agreements between Washington and two key Asian economies—Japan and South Korea—which analysts say could lift business confidence and manufacturing activity in the coming months.
In export-reliant nations like Japan and South Korea, factory output continued to shrink. The latest purchasing managers’ index (PMI) data underscored the strain President Donald Trump’s trade policies have placed on the global free trade framework that Asia depends on for economic growth.
China, Asia’s economic powerhouse, also saw manufacturing conditions deteriorate. The S&P Global China General Manufacturing PMI fell to 49.5 in July from 50.4 in June, missing Reuters’ forecast of 50.4 and slipping below the 50-point line that separates growth from contraction.
This followed an official survey a day earlier that showed Chinese manufacturing contracted for the fourth consecutive month, suggesting the earlier surge in exports ahead of anticipated US tariffs is tapering off, while domestic demand remains weak.
“The survey provides further evidence that China’s economy lost some momentum last month, largely due to domestic weakness,” said Zichun Huang, economist at Capital Economics.
Japan’s manufacturing PMI declined to 48.9 in July from 50.1 in June, suggesting US tariffs had started to take a toll on the world’s fourth-largest economy. Much of the survey data was compiled before Japan struck a trade agreement with the US that will reduce tariffs from a threatened 25% to 15%.
Annabel Fiddes, economics associate director at S&P Global Market Intelligence, which compiled the survey, said, “It will be important to see if this will translate into greater client confidence and improved sales in the months ahead.”
In South Korea, factory activity contracted for the sixth consecutive month. The country’s S&P Global PMI dropped to 48.0 in July, down from 48.7 in June, continuing a persistent trend of sluggish industrial output.
Faridah Abdulkadiri
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