Round-up of economic activity and employment in Asia, during May 2016

The Nikkei Purchasing Managers’ Index (PMI) measures economic activity (such as output, new orders, prices) and consequently employment growth/contraction.

A number above 50 points towards an economic expansion and below 50 points toward a contraction.

Here is a summary of the PMI numbers for countries in Asia, during May 2016.

INDIA

India’s Manufacturing PMI, moved up to 50.7 in May 2016, from 50.5 in April.

New orders increased at a quicker pace, and businesses took on more employees, which pushed up the figure.

The headline PMI remained in expansion territory, but recorded one of its lowest readings since the end of 2013, suggesting that the sector is barely improving,” Pollyanna De Lima, an economist at Markit, which compiles the survey, said.

“So far, there is little evidence that the latest cut in the benchmark rate acted to significantly improve business conditions for manufacturers. Therefore, further stimulus may be necessary to shift the economy into a higher gear.”

SINGAPORE

Singapore’s business activity was largely unchanged in May 2016 with the PMI at 50.1, up from 49.4 in April 2016.

Annabel Fiddes, Economist at Markit, said:

“Companies reported an improvement in the rate of output growth, albeit modest.

The data suggest that new business was hindered by poor foreign demand, with export sales dropping solidly in the latest survey period.”

HONG KONG

The PMI for Hong Kong was 47.2 in May 2016, an increase from 45.3 in April, but below the important 50.0 value for the 15th month in a row.

Annabel Fiddes, said:

“The health of Hong Kong’s private sector continued to decline in May.

However, the headline PMI indicated that the extent of the downturn weakened, with output, new orders and employment all falling at softer rates in the latest survey period.”

MALAYSIA

Malaysia’s PMI for May came in at 47.2, up slightly from the 5-month low of 47.1 in April 2016.

“The manufacturing sector in Malaysia showed no signs of improving mid-way through the second quarter of 2016,” said Amy Brownbill, economist at Markit.

“Data also suggested that the drop in total new orders was driven by the domestic market, as international demand rose slightly.”

INDONESIA

Indonesia’s PMI fell to 50.6 in May 2016, from April’s 50.9.

Slower expansion in new work, coupled with unchanged production volumes pushed the number down.

Pollyanna De Lima, said “May’s stagnation in output is unwelcome news, given that manufacturers have only recently seen the end of a prolonged sequence - 17 months - of contraction in production. Total new orders rose at a weaker pace than in April, while external demand continued to fall.”

However, “The outlook… appears encouraging as businesses continued to take on additional workers and scaled up their buying activity to the greatest extent since July 2014,” she said.

VIETNAM

Vietnam’s Manufacturing PMI for May, increased to 52.7 (52.3 in April 2016).

Business conditions have improved in the country, in each of the previous 6 months.

“The strength of new order growth is the highlight from May’s release and should help lead to further improvements in output and employment in coming months,” said Andrew Harker from Markit.

“It is becoming clearer that the recent period of deflationary pressure has come to an end, but Vietnamese firms have so far been able to restrict the extent to which they have raised their output prices. This could change should the rate of cost inflation continue to build,” he added.

JAPAN

The manufacturing PMI in Japan fell to 47.7 in May from 48.2 in April.

The effects of the Kumamoto earthquake continued to heavily impact the goods producing sector, taking the number to its lowest since January 2013.