APAC: Manufacturing PMIs may be bottoming out but remain low

Manufacturing PMIs mostly improved in Asia-Pacific in December. Out of the major 14 economies in the region, only the indices in Japan and Vietnam saw (slight) declines. PMIs in five economies (Malaysia, Singapore, South Korea, Taiwan and Thailand) just about moved out of contraction territory. The indexes remain in contraction zone in Australia, Hong Kong, Indonesia and Japan. Despite the positive trend overall, almost all manufacturing PMIs in the region remain well below their respective historical averages. Furthermore, business surveys in China (which tend to lead the region) mostly edged down in December. This suggests that while manufacturing activity may be bottoming out, a stabilization or mild recovery is more likely going forward than a sharp upturn. The growth outlooks in most economies continue to present challenges. In this context, policy support is likely to continue across the region.