Asian factory activity shows modest growth while cost pressures cloud recovery

December PMI readings showed narrow manufacturing expansion in parts of Asia, with Taiwan at 50.9 and South Korea at 50.1, while firms reported rising input costs and some material shortages.

Manufacturing activity across parts of Asia showed modest improvement in December according to S&P Global surveys. Several economies recorded PMIs above the 50.0 threshold, signalling narrow expansion. Taiwan and South Korea returned to expansionary readings, while other regional markets showed mixed but generally positive results. At the same time, firms reported higher input costs and some material shortages. Key facts: - S&P Global data put Taiwan's headline PMI at 50.9 in December, its first expansionary reading in ten months. - South Korea's PMI rose to 50.1 in December from 49.4 in November, marking expansion after three months. - India's PMI declined to 55.0 in December from 56.6 in November, with weaker international orders cited. - Vietnam's PMI remained at 53 in December, and the Philippines, Malaysia and Indonesia also recorded PMI readings above 50. - Firms across the region reported rising input and raw material costs and some material shortages, and some firms raised factory gate prices to protect margins. - Economists and S&P Global noted improved external demand and pointed to strong global demand for AI-related hardware as a potential supporting factor. Summary: Manufacturing across much of Asia ended the year on firmer ground as external demand improved and several PMIs moved into expansion. Rising costs, material shortages and pressure on margins temper the recovery. The outlook depends on whether overseas demand and supply-chain resilience continue to strengthen. Undetermined at this time.