North Asian Manufacturing Contracting As New Orders Weak

Activity in the manufacturing sector of northern Asia continued to contract in June. Korea, Japan, China and Taiwan all recorded PMIs below the breakeven-50 level.

• South Korea’s S&P Global manufacturing PMI fell further to 47.8 in June from 48.4 due to sharper decreases in production and demand. Business optimism fell to its lowest in 6-months as uncertainty over when a recovery would take place persisted. New orders fell further posting the steepest decline so far this year due to both weak global and domestic economic conditions. Input and output price pressures eased.
• Taiwan’s manufacturing PMI rose slightly to 44.8 from 44.3, but remained well in contractionary territory. The weakness was driven by significant falls in production and orders. New export orders fell at their fastest pace in 5 months. Jobs were reduced at their steepest rate since March 2009, while inventories and purchases were also cut sharply. Weaker global demand expectations weighed on the outlook. Selling prices were reduced helped by lower input costs.