The green shoots seen in the Asian manufacturing sector purchasing managers’ indices (PMIs) in November survived in December and strengthened in India, China, South Korea and Taiwan.
In India, output expanded at the fastest rate in six months, while China saw its highest PMI reading since May 2011. However, for most export-oriented countries in the region, export growth remained fragile, not surprising given that the euro zone remains in doldrums. With the US also facing fiscal headwind, it remains to be seen whether the shoots will be able to survive in the months ahead. Nevertheless, the momentum in Indian manufacturing should continue in January, because, as Leif Eskesen, chief economist for India and Asean at HSBC said, “Final goods inventories’ depletion continued, which suggests that output growth is likely to hold up in coming months.”