(Adds more details on India)
By Saikat Chatterjee
HONG KONG, April 3 Factories across much of Asia
posted another month of solid growth in March, rounding off a
strong quarter for the world's manufacturers, even as exporters
fear a rise in U.S. protectionism could snuff out a global trade
China again led the way, with an official manufacturing
index expanding at the fastest pace in nearly five years, while
factory surveys on Monday showed encouraging growth as well in
Japan, India and much of emerging Asia.
Higher commodities prices have helped boost the value of
exports, along with a global thirst for electronic gadgets, but
many countries are reporting stronger sales volumes as well,
even as the new Trump administration starts to flex its muscles
“Asia's economic backdrop remains solid with most countries
remaining above the key threshold level of expansion, though
U.S. trade protectionism fears is the biggest uncertainty for
now,” said Aidan Yao, an economist at AXA Investment Managers in
In China, the official Purchasing Managers' Index (PMI) on
Friday rose to 51.8 in March from the previous month's 51.6,
thanks to a months-long construction boom which is helping to
boost resources prices around the world.
That was the strongest reading since April 2012, though a
private survey focusing on smaller firms painted a slightly more
cautious picture, raising questions about whether the export
recovery can be sustained.
Julian Evans-Pritchard, an economist at Capital Economics in
Singapore, believes the strength in China won't last, reckoning
a flurry of measures to cool its overheated property market and
central bank policy tightening will lead to a slowdown in
investment and industrial activity in coming quarters.
But the biggest risk for China may be brewing halfway across
the world, with U.S. President Donald Trump due to hold his
first meeting with counterpart Xi Jinping in Florida later this
Trump foreshadowed the risk that those talks could be tense,
tweeting on Thursday that the United States could no longer
tolerate massive trade deficits and job losses.
On Friday, Trump sought to push his crusade for fair trade
and more manufacturing jobs back to the top of his agenda by
ordering a study into the causes of U.S. trade deficits and a
clampdown on import duty evasion.
The failure of the new U.S. administration to push through
healthcare reforms last month has also added to global worries
that Trump will struggle to pass much-anticipated tax cuts and
fiscal spending plans which could boost demand in the world's
Delays to the reflationary plans could see U.S. orders and
global investment moderate in coming months as businesses grow
AS GOOD AS IT GETS?
While China has strong domestic demand to fall back on, at
least for now, other export-reliant Asian economies are more
vulnerable if Trump goes on a trade offensive.
Japanese factory activity expanded at a solid clip of 52.4
in March, though at a slightly cooler pace than in the previous
month as growth in new export orders and output slowed.
Its modest economic recovery has been driven largely by a
resurgence in exports, which are helping to offset stubbornly
sluggish demand at home.
In South Korea, where exports account for half of the
economy and domestic demand is similarly weak, readings have
been decidedly mixed.
Factory activity shrank for an eighth straight month and at
a faster pace than in February, prompting factory owners to cut
jobs at the fastest pace since the global financial crisis, a
private survey showed.
But official trade data at the weekend showed the country's
exports grew more than expected in March, albeit at a more
modest pace than in February.
On a more upbeat note, activity in India's manufacturing
sector expanded at the fastest pace in five months as output and
new orders accelerated.
The findings suggested the world's fastest growing major
economy has largely recovered from Prime Minister Narendra
Modi's shock decision in November to ban high-value currency
notes, which caused huge disruptions to the largely cash-based
Similar activity surveys later in the global day are
expected to show solid factory growth in the United States and
Bolstering expectations of increasing resilience in the
global economy, data last week showed U.S. inflation rising at
its fastest pace in five years despite some sluggishness in
In Europe, preliminary PMI readings had indicated businesses
across the euro zone ramped up activity at the fastest pace in
almost six years in March as demand grew despite sharper price
(Reporting by Saikat Chatterjee; Editing by Kim Coghill)