Rising AI orders are still cool Taiwan’s PMI fell to 54.9 in October, Japan and South Korea’s manufacturing industry slowed down together

Manufacturing industries in Asia’s major chip-exporting countries continued to expand in October, but growth slowed. Taiwan’s manufacturing purchasing managers’ index (PMI) fell to 54.9 from its highest level in more than five years, still rising for 11 consecutive months;Japan ,south korea And China also became weak. Although demand for chips and AI remains strong, the war in the Middle East has driven up energy and food prices, reducing consumer and business confidence.

S&P Global announced Monday that Taiwan’s manufacturing PMI fell from 56.7 in September to 54.9 in October, still above 50, which represents economic expansion. New orders are continuously increasing due to strong demand in the country and abroad. The main driving force comes from export orders, but the growth rates of both are lower than last month.

Rising demand and improved productivity have also helped Taiwanese manufacturers increase production. Despite the recession, production is close to continuing year-on-year growth.

Japan’s manufacturing PMI fell to 53.3 from 54.1 in October. Growth in production and new orders slowed, and the overall expansion rate was the slowest in seven months. South Korea’s PMI fell from 53.9 to 51.3. The expansion rate fell to the lowest in eight months, hit by weak production volumes and demand.

In mainland China, the Ratingdog manufacturing PMI compiled by S&P Global fell slightly to 52 from 52.1, still in expansion range. However, official manufacturing data released on Saturday showed the economy shrank again in October for the third time in four months.

Nguyen Hoang Nam, China economist at Capital Economics, said that after the mainland economy improved in September, growth momentum weakened in October. The manufacturing industry has slowed down a bit, but foreign demand is still supportive; Even more worrying is that construction industry activity has weakened significantly, and industry players have become pessimistic about the prospects, reflecting a decline in corporate confidence over whether fiscal support can significantly boost the economy this year.

Asia’s manufacturing industry is not cooling off completely. The expansion rates of Vietnam, Indonesia and Malaysia accelerated in October compared to the previous month.

Asian manufacturing had earlier benefited from strong demand for chips and AI-related products, outperforming many other regions. Now the market is beginning to examine whether AI investments can be profitable. The prolonged war in Iran has also put export-oriented economies under greater pressure.

Toru Nishihama, chief emerging markets economist at Dai-ichi Life Economic Research Institute, said that strong demand for chips and AI has basically masked the weakness of the Asian and global economies, but fuel and food prices have been continuously rising due to the war in the Middle East, making it difficult to maintain this situation.

He noted that high inflation is hurting consumption in Asia, and Chinese companies have stepped up price competition, which is also driving down exports from competitors such as Japan and South Korea.

The International Monetary Fund (IMF) estimates the Asian economy will grow 4.8% this year and slow to 4.4% next year. Although these forecasts are higher than the April estimate, they are still less than 5% in 2025. The IMF also warned that the energy shock caused by the Iran war and a possible correction of the AI ​​boom pose increased risks to the Asian economy.