Asia’s factory sector expanded broadly in January, helped by firm overseas demand and a rebound in export orders that offset lingering tariff uncertainty and weak spots in domestic consumption, a run of private-sector purchasing managers’ surveys showed on Monday.
The data offered policymakers some comfort that the immediate shock from higher U.S. tariffs has stabilised for now, especially for export-reliant economies. Japan and South Korea posted multi-year highs in manufacturing activity as demand from major markets—particularly the United States—held up, supporting new orders and output.
In China, the private RatingDog China General Manufacturing PMI (compiled by S&P Global) rose to 50.3 in January from 50.1 in December, its strongest reading since October and just above the 50-point line that separates expansion from contraction. Survey details pointed to faster output growth and a pickup in export orders.
The stronger private reading contrasted with an earlier official gauge that suggested activity faltered—an increasingly common divergence that economists often attribute to differences in sample composition and sector coverage.
Japan’s manufacturing PMI climbed to 51.5 from 50.0, the strongest since August 2022, with S&P Global Market Intelligence noting the sharpest upturn in output and new orders in nearly four years. The report also flagged rising cost pressures linked to labour and inputs, as well as a weaker yen—factors that could affect margins and pricing decisions in coming months.
In South Korea, PMI rose to 51.2 from 50.1, the highest since August 2024, extending a modest recovery in factory momentum. Elsewhere in Asia’s export supply chain, Taiwan’s PMI increased to 51.7 (from 50.9), while Indonesia’s PMI rose to 52.6 (from 51.2), indicating quicker expansion.
The improving tone aligns with the International Monetary Fund’s January update that nudged up its 2026 global growth forecast, citing resilience driven in part by technology investment and private-sector adaptation despite trade-policy headwinds.
Still, analysts caution that the region’s factory rebound remains sensitive to renewed tariff escalation, shipping disruptions, and the durability of end-demand in the U.S. and Europe meaning January’s expansion is encouraging, but not yet a guarantee of smooth sailing through 2026.
