Asia growth eases at start of Q3 as manufacturing struggles
The following is an extract from IHS Markit's monthly Asia PMI overview presentation. For the full report please click on the link at the bottom of the article.
Asia growth eases, led by slowdown in manufacturing
Latest PMI data signalled softer growth momentum across Asia, led by a slowdown in manufacturing. The Asia Composite PMI Output Index, compiled by IHS Markit, fell to a ten-month low of 51.2 in July, from 52.2 in June. The latest reading was also below the average for the first half of 2017, though it was consistent with Asia GDP rising at an annual rate of around 5.0%.
There were signs that growth could slow further in coming months. Inflows of new business rose at the weakest pace since last November, and employment expanded at the slowest rate so far this year. Expectations about future output came in at a seven-month low, albeit still positive.
Asia PMI & economic growth
New work, employment and expectations
Manufacturing weakens further, as services growth also slows
The Asian manufacturing sector saw only a marginal improvement in operating conditions in July. Production expanded at the weakest rate since last September, which in turn weighed on hiring. Though marginal overall, the latest reduction in Asian manufacturing employment was the quickest seen for eight months.
Growth in the Asian service sector continued to outpace that seen in manufacturing, but signs of weakness also emerged. Furthermore, services business activity increased at the slowest pace for five months in July. The latest data therefore amplify concerns that slower manufacturing growth could weigh on the performance of the service sector going forward.
Bernard Aw, Principal Economist, IHS Markit
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