Asian plants shake up supply headaches, but Omicron introduces new risks Reuters

By Leika Kihara

TOKYO (Reuters) – Asian plant activity rose in November as supply bottlenecks eased, but rising input costs and renewed weakness in China cut off opportunities for an early and lasting recovery from the region’s pandemic paralysis.

The newly detected Omicron coronavirus variant has emerged as a new concern for regional policymakers, who are already facing the challenge of bringing their economies to a standstill amid rising product costs and a shortage of parts that are trying to control inflation.

China’s factory activity fell to a contraction in November, as the Caixin / Markit Manufacturing Purchasing Managers ’Private Index (PMI) showed on Wednesday as soft demand and rising prices hurt manufacturers.

The findings of a private survey that focuses more on small businesses in coastal regions contrasted with those made in China’s official PMI on Tuesday, with manufacturing activity rising unexpectedly in November, albeit at a very slow pace.

“Relaxing supply-side constraints, especially easing power reductions, accelerated the pace of production recovery,” Wang Zhe, senior economist at Caixin Insight Group, said in a note accompanying the data release.

“But demand was relatively weak, suppressed by the COVID-19 epidemic and rising product prices.”

Beyond China, however, the PMI seemed to be fixing activity in the factories, showing expansion in Japan, South Korea, Vietnam and the Philippines.

Japan’s PMI rose to 54.5 in November from 53.2 in October, the fastest pace of expansion in nearly four years.

South Korea’s PMI rose to 50.9 from 50.2 in October, remaining above the 50 mark threshold that indicates the expansion of activity for 14 consecutive months.

But production fell in South Korea for the second month in a row as Asia’s fourth-largest economy struggles to fully regain strength in the face of continued supply chain disruptions.

“Overall, as new export orders are returning to countries hampered by Delta outbreaks and still underway with a downturn in the supply chain, there is a strong chance of a steady rebound in the region’s industry,” said Alex Holmes, an emerging Asian economist. Capital Economics.

Vietnam’s PMI rose to 52.2 from November’s 52.1 in October, while the Philippines’s rose to 51.7 from 51.0.

Taiwan’s manufacturing activity continued to grow in November, but at a slower pace, the index rose to 54.9 from 55.2 in October. The picture was similar in Indonesia, where the PMI fell to 53.9 from 57.2 in October.

Surveys in November probably did not reflect the spread of the Omicron variant, which could put more pressure on pandemics disrupted supply chains, as many countries imposed new border controls to shut themselves down.