Asia’s Major Producers Witness Manufacturing Contraction in July, Private Surveys Reveal

A slew of private surveys released on Tuesday indicate a concerning trend, as manufacturing activity in several of Asia’s major producers experienced a contraction in July. These reports underscore the challenges still faced by the region’s economies as they strive to recover from the impact of the global pandemic.


Survey Findings:

Private surveys conducted across different Asian countries exposed a notable decline in manufacturing activity last month. Key benchmarks, such as the Purchasing Managers’ Index (PMI), revealed a contraction in the factory sector across the region.



One of Asia’s largest economies, China, witnessed a slowdown in its manufacturing sector. The Caixin/Markit Manufacturing PMI fell to 50.3 in July from 51.3 recorded in June, marking the smallest increase in factory activity in more than a year. This drop in expansion was primarily attributed to rising raw material costs, supply chain disruptions, and weaknesses in the global market demand.



Similarly, Japan’s manufacturing industry faced a contraction in July. The au Jibun Bank Flash Japan Manufacturing PMI tumbled to a 15-month low of 52.2. This decline can be attributed to the resurgence of COVID-19 cases in the country, which led to a decline in domestic demand and impacted production outputs.


South Korea:

South Korea, another significant player in the region, also experienced a contraction in manufacturing. The IHS Markit Manufacturing PMI for Korea dropped to 53.0 in July, showcasing a decline in business conditions. Concerns regarding the country’s export demand and its semiconductor industry were key factors contributing to the contraction.


Implications and Outlook:

The setback in manufacturing activity marks a worrisome development for Asian economies, which had been showing signs of a gradual recovery. These private surveys indicate the challenges faced by exporters, including rising input prices, supply chain disruptions, and uncertainties surrounding the global economic recovery.


Furthermore, the resurgence of COVID-19 infections remains a significant concern, hampering domestic demand and posing risks to the industrial sector’s revival in the near term. Sustaining the recovery and restoring manufacturing growth will require careful navigation of both domestic and international factors.


However, there are some silver linings despite the contraction in manufacturing. Vaccination drives and the easing of worldwide travel restrictions offer hope for a global economic resurgence. Additionally, continued efforts by governments to stimulate domestic demand and support industries can aid in the region’s eventual recovery.



Asia’s major producers faced a setback in their manufacturing sectors as private surveys released on Tuesday revealed a contraction in July. The challenges posed by rising input costs, supply chain disruptions, and the ongoing COVID-19 pandemic are dampening the region’s industrial recovery. As countries strive to overcome these hurdles, sustainable growth will require persistent efforts from both public and private sectors to restore confidence and stimulate demand.


Keywords: July, have brought


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