Factory Activity Declines Amid Trade Tensions
Manufacturing output across the Asia-Pacific region contracted last month as trade measures impacted demand.
Surveys of purchasing managers released today indicate a decline in production during August. In Japan, export orders fell at the steepest rate since March 2024, according to data provider S&P Global, with factory activity continuing to shrink.
Japan’s Manufacturing Purchasing Managers’ Index rose to 49.7 in August from 48.9 in July but remained below the 50-point threshold that separates growth from contraction.
Annabel Fiddes of S&P Global Market Intelligence noted:
"The latest PMI data suggests manufacturing conditions in Japan neared stabilization in August, supported by a slower decline in output. However, demand remained weak, with new orders continuing to drop slightly. The sharper fall in export business, declining at the fastest pace in nearly 18 months, was especially concerning."
New trade measures affecting Japanese goods took effect earlier in August, imposing a 15% levy on certain exports.
In South Korea, manufacturers reported persistent reductions in output and new orders last month, citing weaker domestic conditions and global trade instability. The country’s Manufacturing PMI edged up to 48.3 in August from 48.0 in July but still reflected a seventh consecutive month of deteriorating business conditions.
Taiwan’s manufacturing sector also weakened, with producers noting significant drops in production and new orders. Businesses reported declining demand both domestically and internationally, while uncertainty surrounding trade measures and global economic conditions further reduced confidence for the coming year.
Fiddes added:
"The latest PMI data shows Taiwan’s manufacturing sector remains under pressure due to weak global demand and ongoing uncertainty over trade policies. While the slowdown in output and orders was less severe than in July, the overall contraction remained pronounced. Many firms cited client hesitation in committing to new projects due to unclear trade policies."
China, engaged in trade negotiations, also faced continued uncertainty. Official data revealed that manufacturing activity contracted for the fifth consecutive month in August, with the factory PMI rising slightly to 49.4 from 49.3 in July.
The outlook for international trade remains uncertain amid ongoing tensions.
Read next
IEA set to urge unprecedented stockpile oil release to lower crude prices
The International Energy Agency is set to request the biggest drawdown of state oil reserves ever recorded, aiming to soothe the price surge sparked by the US‑Israeli strikes on Iran.
The global energy monitor is anticipated to urge its 32 members to free roughly 400 million barrels of emergency
How far could oil prices climb, and what could be the worldwide economic consequences?
Concerns about the world economy have intensified as oil prices have surged past $100 a barrel following the US‑Israel clash with Iran.
Economists warn that a growing chance of an extended war in the key energy‑exporting zone could severely affect living standards globally, reviving fears of a fresh
UK job market stalls as firms stay cautious on hiring
Data indicate that the UK labour market is struggling under weak recruitment demand, with only modest indications of improvement.
Two reports issued on Monday note that firms stay wary of taking on new employees because of cost pressures and economic uncertainty, underscoring the market’s continued fragility.
The monthly employment