Global factory activity improved last month, with a better performance by key Asian exporters and a return to manufacturing expansion in the euro zone, private surveys showed yesterday, suggesting the hit from higher US tariffs may have run its course for now.
The HCOB Eurozone Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 49.5 in January from December’s nine-month low of 48.8, with a return to output growth after a contraction the month before.
Manufacturing activity growth in export powerhouses Japan and South Korea hit multi-year highs, suggesting brightening prospects.
China‘s factory activity expanded at a faster pace in January too as export orders rebounded, which contrasted with an earlier official report showing activity faltering.
“Exports from most countries have surged in recent months, and we think the near-term outlook for Asia’s export-oriented manufacturing sectors remains favourable,” said Shivaan Tandon, Asia Economist at Capital Economics.
The RatingDog China General Manufacturing Purchasing Managers’ Index, compiled by S&P Global, rose to 50.3 from 50.1 in December, exceeding the 50-mark that separates growth from contraction and hitting the highest level since October. The upbeat survey likely reflects China’s export drive that offset weak domestic consumption and helped the world’s second-largest economy expand five per cent last year.
Japan’s S&P PMI rose to the strongest level since August 2022, driven by robust demand from key markets such as the US and Taiwan.
The International Monetary Fund raised its 2026 global growth forecast last month on receding fears over the hit from US tariffs, and a continued AI investment boom that has fuelled asset wealth and expectations of productivity gains.
Brightening prospects for global demand have helped factory activity expand across Asia. Taiwan’s PMI rose to 51.7 in January from 50.9 in December, while that of Indonesia rose to 52.6 from 51.2.
India’s manufacturing activity inched up in January as demand improved slightly, though the gain wasn’t strong enough to lift business optimism or meaningfully increase hiring.
Manufacturing output in the Eurozone climbed back above the 50 threshold to 50.5 in January from 48.9 in December.
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