The manufacturing activities in China’s factories reduced to a four-month low following increased costs of raw materials, shortage of semiconductors, and the outbreak of COVID-19 in Guangdong, as supply chain disruptions in Asia persist.
- The shortage in chip supplies has adversely affected manufacturing facilities in Asia. For example, industrial production in South Korea and Japan reduced in May from April as auto production reduced because of the shortage of semiconductors and slowing momentum in the Asian economies.
- China’s PMI of June reduced slightly to 50.9 compared to 51.0 in May, as it exceeded the forecasted slowdown of 50.8.
- Zhao Qinghe, a senior statistician, NBS, stated that the slowdown in production was caused by an inadequate supply of coal, shortage of semiconductors, and other supply chain disruptions.
An increase in local demand is a bright spot in PMI numbers, pointing to a resilient Chinese economy.
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