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Business Recorder
01-08-2025
- Business
- Business Recorder
Asia's factory activity worsens as US trade uncertainty bites
TOKYO: Asia's factory activity deteriorated in July as soft global demand and lingering uncertainty over U.S. tariffs weighed on business morale, private sector surveys showed on Friday, clouding the outlook for the region's fragile recovery. The surveys were taken before Japan and South Korea clinched trade deals with Washington, offering some hope that receding uncertainty could prop up manufacturing activity in coming months, some analysts say. Factory activity shrank in export power-houses Japan and South Korea, surveys for July showed, underscoring the challenge Asia faces as President Donald Trump's policies threaten the global free trade system the region relied upon for growth. China's factory activity also deteriorated in July as softening business growth led manufacturers to scale back production, boding ill for the region's economy. The S&P Global China General Manufacturing PMI fell to 49.5 in July from 50.4 in June, undershooting analysts' expectations of 50.4 in a Reuters poll and dropping below the 50 threshold that separates growth from contraction. The reading comes a day after an official survey showed China's manufacturing activity shrank for a fourth straight month in July, suggesting a surge in exports ahead of higher U.S. tariffs has started to fade while domestic demand remained sluggish. The survey 'provides further evidence that China's economy lost some momentum last month, largely due to domestic weakness,' said Zichun Huang, an economist at Capital Economics. The S&P Global Japan manufacturing purchasing managers' index (PMI) also fell to 48.9 in July from 50.1 in June, a sign U.S. tariffs were hurting the world's fourth-largest economy. Most of the survey data was collected before the announcement of a Japan-U.S. trade agreement last month, which lowers tariffs imposed on Japan to 15% from a previously threatened 25%. As the trade deal with Washington kicks in, 'it will be important to see if this will translate into greater client confidence and improved sales in the months ahead,' said Annabel Fiddes, economics associate director at S&P Global Market Intelligence, which compiles the survey. South Korea also saw factory activity contract in July for the sixth straight month with the S&P Global PMI falling to 48.0 in July, from 48.7 in June. 'Both production volumes and new orders fell at a steeper rate than that in June, with anecdotal evidence indicating that weakness in the domestic economy was compounded by the impacts of U.S. tariff policy,' said Usamah Bhatti, economist at S&P Global Market Intelligence. The survey was conducted from July 10 to July 23, before South Korea reached on Wednesday a trade deal with the U.S. lowering tariffs to 15% from a threatened 25%. Factory activity in July expanded in the Philippines and Vietnam, but shrank in Taiwan, Indonesia and Malaysia, PMIs showed.
New Straits Times
01-08-2025
- Business
- New Straits Times
Asia's factory activity worsens as US trade uncertainty bites
TOKYO: Asia's factory activity deteriorated in July as soft global demand and lingering uncertainty over US tariffs weighed on business morale, private sector surveys showed on Friday, clouding the outlook for the region's fragile recovery. The surveys were taken before Japan and South Korea clinched trade deals with Washington, offering some hope that receding uncertainty could prop up manufacturing activity in coming months, some analysts say. Factory activity shrank in export power-houses Japan and South Korea, surveys for July showed, underscoring the challenge Asia faces as President Donald Trump's policies threaten the global free trade system the region relied upon for growth. China's factory activity also deteriorated in July as softening business growth led manufacturers to scale back production, boding ill for the region's economy. The S&P Global China General Manufacturing PMI fell to 49.5 in July from 50.4 in June, undershooting analysts' expectations of 50.4 in a Reuters poll and dropping below the 50 threshold that separates growth from contraction. The reading comes a day after an official survey showed China's manufacturing activity shrank for a fourth straight month in July, suggesting a surge in exports ahead of higher US tariffs has started to fade while domestic demand remained sluggish. The survey "provides further evidence that China's economy lost some momentum last month, largely due to domestic weakness," said Zichun Huang, an economist at Capital Economics. The S&P Global Japan manufacturing purchasing managers' index (PMI) also fell to 48.9 in July from 50.1 in June, a sign US tariffs were hurting the world's fourth-largest economy. Most of the survey data was collected before the announcement of a Japan-US trade agreement last month, which lowers tariffs imposed on Japan to 15% from a previously threatened 25%. As the trade deal with Washington kicks in, "it will be important to see if this will translate into greater client confidence and improved sales in the months ahead," said Annabel Fiddes, economics associate director at S&P Global Market Intelligence, which compiles the survey. South Korea also saw factory activity contract in July for the sixth straight month with the S&P Global PMI falling to 48.0 in July, from 48.7 in June. "Both production volumes and new orders fell at a steeper rate than that in June, with anecdotal evidence indicating that weakness in the domestic economy was compounded by the impacts of US tariff policy," said Usamah Bhatti, economist at S&P Global Market Intelligence. The survey was conducted from July 10 to July 23, before South Korea reached on Wednesday a trade deal with the US lowering tariffs to 15% from a threatened 25%. Factory activity in July expanded in the Philippines and Vietnam, but shrank in Taiwan, Indonesia and Malaysia, PMIs showed.
AU Financial Review
30-07-2025
- Business
- AU Financial Review
ASX to slip, Fed decision and Powell's comments awaited
Australian shares are poised to rise, tracking gains in New York after data reconfirmed the resilience of the US economy. Investors are waiting for the Federal Reserve's 4am AEST policy decision. Meta and Microsoft are set to report results after Wall Street's closing bell at 6am AEST. US government bond yields were higher after the Treasury Department signalled it will rely more on the shortest-dated securities to fund the gaping federal deficit at least until 2026. The S&P 500, coming off its best streak of gains since 2020, is about to enter what has historically been its toughest stretch of the year. Over the past three decades, the benchmark has performed the worst in August and September, losing 0.7 per cent on average in each month, compared with a 1.1 per cent gain on average across other months, data compiled by Bloomberg show. The US economy expanded an annualised 3 per cent pace in the June quarter, however economists were wary of reading too much into the print. 'We retain our outlook for a slowdown in US GDP growth in 2024, as restrictive trade and immigration policies outweigh the benefits from fiscal policy and deregulation,' Morgan Stanley's Michael Gapen wrote in a note. 'Prior to this report, we were forecasting Q4/Q4 growth of 0.8 per cent in 2025; we now expect 1.0 per cent, reflecting the stronger 2Q out turn but no extrapolation into later quarters. We continue to expect 1.1 per cent growth in 2026.' Market highlights ASX futures are pointing down 7 points or 0.1 per cent to 8708. All US prices near 2.30pm New York time. *Bloomberg pricing Today's agenda Quarterly reports expected on Thursday from Beach Energy, Liontown Resources and Origin Energy. RBA deputy governor Andrew Hauser will participate in a fireside chat at the Barrenjoey Economic Forum, Sydney at 9.20am AEST. A wave of data is set for release at 11.30am AEST, including June retail sales, building approvals, private sector as well as import and export price data. NAB said its retail transactions data suggests a strong rise in the month and 'we have pencilled in a 1.0 per cent month-over-month increase'. As for overseas, Japan will release June retail sales and industrial output, China will release manufacturing and non-manufacturing PMIs for July and the Bank of Japan will hold a policy meeting. Later, the US will release June personal spending and core PCE price data, a quarterly employment cost index and weekly jobless claims. On the BoJ decision, TD Securities said: ' US-Japan trade deal was struck, but we expect the BoJ to stand pat this month, holding the target rate at 0.5 per cent. 'After the poor showing of the ruling coalition in the Upper House elections, PM Ishiba is facing calls to step down and Japan is likely to enter a phase of political uncertainty. That said, Governor Ueda may signal a hike in October is still on the table as inflation is running at a 30-year high and we will get more clarity on both trade and politics then.' Top stories Rio Tinto boss defends lithium push as earnings slump cuts dividend | The country's biggest iron ore exporter will pay its lowest dividend since 2018 after lower prices and weaker sales volumes hurt its half-year bottom line. | India 'is our friend', the US president said on his Truth Social platform, but its tariffs 'are far too high' on US products. Atlassian gang back together as Farquhar hits Canberra to spruik AI | The billionaire co-founders of the software giant reunited at the National Press Club, setting aside long speculation of a rift in their relationship. | A broader push for higher taxes at the productivity roundtable in August could soften hostility towards the proposed super tax, the government believes. | Commonwealth Bank held the rights to sponsor Cricket Australia for four decades – then Westpac CEO Anthony Miller stole it from under their nose.
Hindustan Times
24-07-2025
- Business
- Hindustan Times
Chinese Social Media Hashtag Signals Growing Frustration With Job Market
Chinese social media buzzwords can offer insight when official data is unreliable. One hashtag making the rounds shows mounting frustration among jobseekers, signaling that efforts to boost employment are falling short. The phrase 'beauty in the time of economic upturns' has been trending on Chinese sites for months, a nostalgic reference to the 2000s-2010s when it was common for fresh graduates to field multiple job offers. China's youth nowadays aren't as fortunate. The private sector can't accommodate millions of young people entering the labor market each year, forcing many to accept positions that don't deliver on dreams of fat paychecks and job security. Many compete to join the ruling communist party to lock down a job in its vast bureaucracy. This year's trade war with the U.S. has added to the sense of uncertainty about the future. Hitting the official 5% economic growth target looks like a stretch, consumer confidence is weak, deflationary pressure is entrenched and there's no end in sight for the property sector's slump. 'We see continued signs of deterioration in the labor market,' Barclays economists said in a recent note, pointing to employment subindexes in recent purchasing manager surveys showing that angst surrounding U.S. tariff is slowing hiring. Economists look at PMIs and other indicators due to the unreliability of official job market figures. China's statistics bureau paused the release of youth unemployment data for a few months after the rate hit a record high in June 2023, and started posting them again after making changes to how it calculates the number. Goldman Sachs's wage tracker suggests the pay growth has been trending down since the first quarter of 2023 when China ended its zero-Covid policy. Despite economic growth in the most recent quarter, sluggish pay increases could weigh on consumption through the rest of this year, GS said in a recent note. Beijing's stepped-up efforts to bolster employment don't seem to be bearing fruit yet, even though its introduced tax incentives for companies and more vocational training for job seekers. Barclays's gauge of private-sector indicators, plus anecdotal evidence across industries and regions, point to scant improvement in the labor market. Instead, there have been more reports of pay cuts and layoffs, the economists said. A poll by Beijing-based Cheung Kong Graduate School of Business shows that hiring has been much weaker than average for the past two years, said Ernan Cui at Gavekal Dragonomics. Those who do get hired are making less and less, indicators suggest. Chinese wages fell sharply across multiple sectors last year, eclipsing the rout seen during the pandemic in 2020, to mark the worst outcome on record, she said. The tech sector has been the worst-hit in the private sphere, but public-sector employers have also cut wages, reflecting local governments' fiscal stress, Cui said. That's feeding into low consumer confidence, Cui said. 'Many people sense that their job and income prospects are precarious, and are thus unwilling to spend.' Policymakers will need to strengthen the social safety net and encourage private sector growth to boost the availability of high-quality jobs, economists say. Until things improve, 'beauty in the time of economic upturns' could continue to trend on Chinese social media. As one blogger on lifestyle app RedNote put it: What people are reminiscing about is when income growth and appreciating housing prices were a certainty, 'and there was a sense that entrepreneurial spirit will be rewarded, things that were never questioned during better economic times.' Write to Singapore editors at singaporeeditors@
Business Times
21-07-2025
- Business
- Business Times
China wage growth hits weakest pace since Covid: Goldman Sachs
[BEIJING] China's wage growth has slowed to the weakest pace outside the pandemic, an alternative indicator compiled by Goldman Sachs Group showed, revealing an obstacle to stronger consumption at home as risks abroad mount. Wages grew 3.9 per cent from a year ago in the second quarter – the lowest reading on record, with the exception of the pandemic years, according to a tracker published on Sunday (Jul 20) by Goldman economists led by Andrew Tilton. That is about a percentage point lower than shown in official statistics so far this year, they said, with the expansion 'trending down' since China reopened from the pandemic in early 2023. 'Our wage tracker suggests that sluggish wage growth may impose headwinds to consumption growth in the second half of 2025,' the economists said. 'We anticipate incremental and targeted easing measures in the second half of the year to alleviate labour market pressures.' China's soft labour market and wage growth remain a key hurdle to a more sustained recovery in consumption, even after retail sales improved in recent months thanks to government subsidies for purchases of items like smartphones, home appliances and cars. In further evidence of weakening pay pressures in China, official statistics on the average annual salary among private enterprises showed an increase of only 1.7 per cent in 2024 from a year ago. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up But gauging the health of the Chinese consumer has become increasingly difficult after a decline in available independent data made it harder to assess labour market conditions, since official employment figures are often believed to underestimate the problem. To get around the dearth of data, Goldman Sachs recently revamped its wage indicator to incorporate statistics including the employment sub-gauges of various purchasing managers' index surveys and payouts from China's unemployment insurance funds, which can be claimed for jobless workers. Those sets of alternative indicators replaced the discontinued wage data from one of China's largest online recruitment platforms as well as delayed results of central bank surveys on household income and sentiment. Apart from Goldman Sachs, other economists have also used PMIs to scrutinise the state of employment. Those surveys have split from the official jobless rate in recent years, with the former indicating sustained sluggishness while the latter remained largely steady. Ernan Cui, a consumer analyst at the research firm Gavekal Dragonomics, said the divergence may stem from the fact that an increasing share of China's labour force is self-employed or engaged in other types of informal work that's not captured by surveys of large companies but still counted by the official statistics bureau. Coupled with poor wage data, it shows people are increasingly being pushed into self-employment or flexible work because of a lack of formal jobs on offer, according to Gavekal's report earlier this month. 'The data indicate that China's labour market has been consistently weak, despite a broadly stable headline unemployment rate,' Cui said in the report. 'Until the labour market truly tightens, it seems unlikely that household confidence will rebound.' BLOOMBERG
