Supply Chain Latest: Asian Factories Show Strength - Bloomberg

Asian factories outside of China stabilized last month, putting the region’s export-heavy economies on solid footing to face possible new challenges from the omicron variant of the coronavirus.

Data Wednesday from IHS Markit showed manufacturing purchasing managers’ indexes across Southeast Asia showed continued growth:

• Vietnam reached its highest since May
• India posted the best reading since January
• Malaysia rose for a fifth straight month
• Thailand saw a slight decline but stayed in positive territory
• Indonesia inched down, too, but expanded for a third month

In northern Asia, the PMIs out today showed Taiwan and trade bellwether South Korea staying in expansionary mode. Japan’s gauge reached its highest since January 2018. (For the full story, click here.)

With Asia’s manufacturing sector showing durability, “we expect most central banks in the region to maintain pro-growth policy stances, even as tightening front-runners look to balance other risks,” Bloomberg’s Chief Asia Economist Chang Shu wrote in a note.

Also working in Asia’s favor are efficient ports that give economies scope for “production increases to be moved rapidly through logistics chains across the region,” Oxford Economics wrote in a note.

“The upturn in production should help ease global supply-chain bottlenecks heading into 2022,” Oxford said. “But port logjams in the U.S. and Europe mean delays will remain significant, and we expect global freight rates to remain high into the first half of 2022.”

Oxford estimates that if supply-chain disruptions prove more persistent, Asia’s GDP growth could be 1.6 percentage points lower next year.

—Brendan Murray in London

Charted Territory

Broken Record

South Korea’s exports are on track to post an all-time high this year

Source: Trade Ministry

South Korea’s exports are on track to post an annual record this year, buoyed by year-end holiday demand and higher product prices. Exports rose 32.1% in November from a year earlier to $60.4 billion, a monthly record, data from the trade ministry showed Wednesday. Shipments to China last month were also the highest ever, while exports to other key markets posted double-digit gains. Sales of chips, the country’s cash cow, jumped 40%.  

Today’s Must Reads

• Canada’s disruptions | British Columbia, home to Canada’s biggest port, is bracing for its most intense deluge after a series of damaging rain storms and historic flooding.
• Off the mark | Final sales for Cyber Monday fell short of estimates and didn’t surpass last year’s record as lackluster sales and scarce inventory kept shoppers from breaking out their credit cards during the start of the holiday shopping season.
• Still negotiating | WTO Director-General Ngozi Okonjo-Iweala said work on an intellectual-property waiver aimed at widening vaccine access in poor countries will continue despite the sudden postponement of a meeting of key trade ministers this week. 
• Staying optimistic | China’s Vice Premier Liu He said he’s confident about the economy’s outlook next year, pledging enhanced support for small and foreign businesses amid the country’s push to pursue a “dual circulation” development model.
• Tougher rules | The Biden administration plans to tighten travel rules by requiring all air travelers to the U.S. to be tested within a day of their departure regardless of vaccination status, according to a person familiar with the matter.
• Orchestrate position | The U.S.’s Indo-Pacific security partnership with the U.K. and Australia is more of a stand against China’s actions than a technology sharing arrangement, President Joe Biden’s Asia czar said.
• Price tag | Team Transitory is throwing in the towel. In a clear sign that the Federal Reserve is shifting to tighter monetary policy, Jerome Powell —  who’s spent months arguing that the pandemic surge in inflation was largely due to transitory forces — told Congress on Tuesday that it’s  “probably a good time to retire that word.”

On the Bloomberg Terminal

• Recovery underway | The shallower-than-expected contraction in Australia’s third-quarter GDP puts the economy in better position for a recovery that Bloomberg Economics thinks is now underway in the fourth quarter after virus restrictions were rolled back. 
• Slowing recovery | The euro-area economy is entering a more difficult phase of its recovery. The easy initial gains from last year’s slump have now been banked and significant hurdles lie ahead, Bloomberg Economics says.
• Use the AHOY function to track global commodities trade flows.
• Click HERE for automated stories about supply chains.
• See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
• Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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— With assistance by Enda Curran

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