Activity at Asian factories continued to expand in May thanks to a continued recovery in global demand, surveys showed Tuesday, although rising raw material costs and supply chain constraints cloud the outlook. .

A spike in COVID-19 infections in some countries could disrupt supply chains, pose a headache for manufacturers and weigh on Asia’s export-led recovery, analysts say.

Japan and South Korea saw moderate expansion in manufacturing activity in May, Purchasing Managers’ Indices (PMIs) showed Tuesday, underscoring the fragile nature of their recoveries.

“The spread of new variants is already having a negative impact on supply chains. If this situation persists, it will hit Asian manufacturers who have struggled to diversify their supply chains outside of China,” said Toru Nishihama, economist chief at Dai-ichi Life Research Institute.

“Asia’s recovery has been driven more by external demand than domestic demand. If companies struggle to export enough goods, it doesn’t bode well for the region’s economies,” he said.

Chinese factory activity grew at the fastest pace this year in May thanks to solid demand at home and abroad, although sharp increases in input prices and tensions in supply chains. supply have hampered the production of some companies, an investigation revealed Tuesday.

The Caixin / Markit Manufacturing PMI, which focuses on small businesses, rose to 52.0 last month, the highest since December and up slightly from April’s 51.9.

The survey followed China’s official PMI on Monday, which showed factory activity in the world’s second-largest economy slowed slightly in May due to soaring raw material costs.

The effects of the spike in infections on manufacturing were greatest in India, where factory activity growth hit a 10-month low, according to the country’s PMI.

The coronavirus epidemic in India has infected 28 million people, killed more than 300,000 people and forced many states to impose restrictions on economic activity.

Factories in Taiwan and Vietnam have so far resisted despite rising infections. Taiwan’s PMI stood at 62.0 in May, slowing from April but remaining well above the 50 mark that separates growth from contraction.

Vietnam’s PMI also remained above 50 at 53.1 in May, although it slowed from 54.7 in April.

Japan’s Jibun Bank PMI fell to seasonally adjusted 53.0 in May from 53.6 the month before, but was above its flash reading of 52.5.

A global chip shortage and supply chain disruptions affected auto production, causing Japanese production growth to exceed expectations in April.

Japanese auto giants Toyota Motor (7203.T) and Honda Motor (7267.T) have suspended production in Malaysia due to lockdown measures imposed to combat the pandemic, Kyodo news agency reported on Tuesday. .

Separate data released on Tuesday showed Japanese companies cut spending on factories and equipment for the fourth consecutive quarter in January-March, as the economy struggles to shake off the coronavirus pandemic.

South Korea’s PMI index stood at 53.7 in May, slowing from April but extending growth for the eighth consecutive month, although the pace of input price increases peaked in 13 years old, according to the index.

The recovery of Asia’s fourth-largest economy remains robust, with South Korean exports posting their strongest expansion in 32 years in May, fueled by stronger consumer demand globally as many economies begin to reopen.

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