Asia’s Factories Plunge to Record Lows as Global Lockdowns Hurt

Factory output across several Asian countries slumped to record lows in April, signaling a deeper contraction in the world’s manufacturing hub even as China begins restarting some operations.

Purchasing managers indexes across Southeast Asia slumped further below 50, the dividing line between contraction and expansion, to post their weakest readings since the series began, according to data released by IHS Markit on Monday. Taiwan, Japan and South Korea dropped to their lowest levels since 2009.

The factory data were another reminder that the global economic recovery from the biggest crisis since the Great Depression likely will be long and uneven. While China has started reopening factories and is ramping up infrastructure spending to support the domestic economy, the regional and global pain will probably persist for some time.

China PMI data released last week showed the official manufacturing purchasing managers’ index slipped to 50.8 from 52 a month earlier. The separate Caixin gauge, more focused on smaller export-orientated firms, returned to contraction.

The slump in South Korea, a bellwether of global trade, shows that even as China re-emerges from its lockdown, it isn’t yet offering enough demand to jumpstart output, according to IHS.

“Although China, South Korea’s biggest export market, appears to be slowly re-opening for business, it’s clear this will be far from sufficient to offset the severe weakness elsewhere,” Joe Hayes, an economist at IHS Markit wrote in a release.

The PMI follows official data that showed South Korea’s exports fell in April by the most since the global financial crisis. The value of overseas shipments dropped 24% from a year earlier led by sharp falls in exports of ship, cars and auto parts, semiconductors and oil products.