Asia's factory activity shrinks in May as US tariffs bite
TOKYO: Asia's factory activity shrank in May as soft demand in China and the impact of US tariffs took a heavy toll on companies, private surveys showed on Monday (Jun 2), highlighting the darkening outlook for the once fast-growing region.
Trade-reliant Japan and South Korea continued to see manufacturing activity contract in May as US President Donald Trump's automobile tariffs cloud the outlook for exports.
Adding to the gloom, an official survey on Saturday showed China's manufacturing activity shrank in May for a second month in a sign of weakness in the world's second-largest economy.
With many Asian economies making little progress in trade negotiations with the US, uncertainty will likely keep companies from boosting production or spending, analysts said.
"It's hard to expect a pick-up in Asia's manufacturing activity any time soon with countries in the region slapped with quite high 'reciprocal' tariffs," said Toru Nishihama, chief emerging market economist at Dai-ichi Life Research Institute.
"With domestic demand weak, China is flooding Asia with cheap exports, which is also putting deflationary pressure on the region's economies," he said.
Japan's final au Jibun Bank Manufacturing Purchasing Managers' Index (PMI) stood at 49.4 in May, up from April but staying below the 50.0 line that indicates contraction for the 11th successive month, a private survey showed on Monday.
The PMI for South Korea, Asia's fourth-largest economy, stood at 47.7 in May, also staying below the 50 mark for a fourth month due to frail demand and the hit from US tariffs, a survey by S&P Global showed.
Both Japan and South Korea saw their economies contract in the first quarter, as Trump's tariffs and uncertainty over US trade policy weighed on exports and corporate activity.
There is little sign conditions will improve.
On Friday, Trump said China had violated a two-way deal to scale back tariffs, whereas China contended it had maintained communication on trade with the United States. Trump also announced a doubling of worldwide steel and aluminium tariffs to 50 per cent, once again rattling international trade.
Japan and the US on Friday agreed to hold another round of trade talks ahead of the G7 summit in June, but Japan's top tariff negotiator said no deal would be reached without concessions on all US tariffs, including on automobiles.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNA
an hour ago
- CNA
Ford, Hyundai post higher US sales in May on strong SUV, truck demand
U.S. auto sales for Ford Motor and South Korea's Hyundai Motor rose in May, the companies reported on Tuesday, as concerns over potential tariff-related price hikes prompted buyers to act fast on their purchases of cars and SUVs. U.S. President Donald Trump's tariff policies have fueled uncertainty across the auto industry, driving up supply costs, pressuring margins and pushing some automakers to pass the expenses on to consumers. The sales also got a boost from offers and trade-in deals for affordable pickups and crossovers. Ford's overall sales rose to 220,959 units in May from 190,014 units a year ago. The Detroit automaker's F-Series truck sales climbed 15 per cent to 79,817 vehicles during the month. Ford in April extended discounted rates to its customers that are generally reserved for its workers to keep sales moving, although the automaker also hiked prices on three of its Mexico-made products in May. Hyundai also reported an 8 per cent year-on-year rise in U.S. auto sales to 84,521 vehicles in May. The company noticed a pick up in demand in March and April with a "little bit of a rush" from consumers coming in to purchase because they were concerned about potential tariff price increases, Randy Parker, CEO of Hyundai Motor America, said in an interview on Tuesday. But no decisions were made on changing sticker prices for the brand's vehicles as a result of tariffs, Parker added. A price protection program instituted by the automaker in early April ended on June 2 and was not extended. The program guarantees no hikes to sticker prices on new vehicles sold through the period. "This period really marks our regular annual pricing review," Parker said. "We take a look at market dynamics, consumer demand, independent of tariffs."
CNA
2 hours ago
- CNA
Singapore Tonight - Jun 2025 - CNA Singapore Tonight Mon 2 Jun 2025
48:08 Min Singapore Tonight From business to politics, health to technology, we bring you up-to-date with the latest news on Singapore and analyze how these events may affect you tomorrow. Singapore Tonight About the show: From business to politics, health to technology, we bring you up-to-date with the latest news on Singapore and analyze how these events may affect you tomorrow. Daily at 10pm (SIN/HK)
Independent Singapore
2 hours ago
- Independent Singapore
Tan Kin Lian slams Trump's Tariff policies in blistering Facebook post
SINGAPORE: Former presidential candidate and businessman Tan Kin Lian took to Facebook on May 31 to sharply criticise U.S. President Donald Trump, describing his tariff policies as economically damaging and politically reckless. In a post titled ' Wrecking Ball Trump,' Tan warned that the tariffs imposed during Trump's administration were backfiring on American businesses, making them less competitive both at home and abroad. Tariffs backfiring on U.S. businesses Tan argued that by taxing imported components, American manufacturers were forced to pay more for the parts they needed to assemble their final products. These higher input costs, he said, had a knock-on effect: companies either raised prices for U.S. consumers, contributing to inflation, or struggled to sell competitively on the export market. 'This made U.S. manufacturers uncompetitive when they export… [and] more expensive to U.S. buyers,' Tan wrote. He cited online videos, claiming that many U.S. factories had shut down and some major companies had relocated operations overseas to escape the rising costs caused by tariffs. See also Open letter to the new CEO of SMRT Job losses and delayed promises The knock-on effect, according to Tan, is widespread job loss across affected states, contradicting Trump's promise that tariffs would bring jobs back to America. 'The new jobs that were supposed to be created in the U.S., due to the tariffs, may take several years to realize,' he noted. Tan echoed critics who liken Trump's approach to a 'wrecking ball'—a blunt-force strategy that damages everything in its path without building anything lasting in its wake. Strong language, sharper criticism Tan did not mince words when addressing Trump's decision-making, stating bluntly that many people consider Trump to be 'insane and incredibly stupid'—an assessment he openly said he shared. Tourism slump paints bleak picture of U.S. soft power In a separate post, Tan commented on the sharp decline in international tourism to the U.S. since Trump returned to office in January 2025. He noted that international arrivals fell year-on-year in March, with even steeper declines from key regions like Western Europe and Central America. He attributed the drop to a mix of political and policy-driven deterrents—among them, aggressive immigration enforcement, border detentions, and controversial rhetoric, including Trump's threat to annex Canada. Countries such as Germany and Canada experienced booking cancellations of over 30%. Cities like New York and Los Angeles have felt the brunt of this shift, with ticket sales to tourist attractions and hotel occupancy rates falling significantly. Canadian flight bookings to the U.S. have reportedly plunged by over 70%. Tan remarked that these developments signal a larger erosion of the U.S.'s global appeal, not just economically but diplomatically. A pattern of self-inflicted harm From shrinking global market share to waning tourism dollars, Tan Kin Lian's posts paint a picture of an America under Trump that is isolating itself—economically, diplomatically, and culturally. 'The U.S. position risks being perceived as unreasonable because it simultaneously escalates tech restrictions while demanding concessions on unrelated issues,' he wrote. Tan concluded that unless the U.S. adopts a more balanced and reciprocal approach, particularly in its dealings with China and the global economy, it risks long-term strategic losses that no short-term posturing can undo.
