Asia factory activity on shaky ground, Latest Business News - The New Paper

Asia factory activity on shaky ground

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HONG KONG: Factory activity recovered last month in parts of Asia but still appeared to be on shaky ground as global demand remained subdued and China's stimulus measures were yet to show their full pulling power.

That left the outlook for the region's central banks skewed towards easing, with Malaysia and New Zealand prime suspects for potential rate cuts, and Australia - whose monetary policy setters also meet next week - facing growing calls to ease.

Business surveys showed factories were struggling around the world, with euro zone data expected to show a contraction in the manufacturing sector, and the US still growing but missing expectations by a wide margin on Wednesday.

The Federal Reserve held interest rates steady overnight, saying it saw no strong case for either hiking or cutting them, disappointing US markets.

A resolution in the trade dispute between Washington and Beijing would go a long way towards improving the mood.

While there is still uncertainty, US Treasury Secretary Steven Mnuchin said the two countries completed "productive" talks on Wednesday and were nearing a deal that would roll back a portion of the US$250 billion (S$340 billion) in US tariffs on Chinese goods.

Purchasing Managers' Indexes showed manufacturing activity contracted in Malaysia and Taiwan in April, slowed in the Philippines and Indonesia, and picked up a notch in Vietnam and Thailand.

Earlier this week, official data showed activity in China expanded for a second consecutive month in April, but at a much slower pace than expected.- REUTERS