Mint Explainer | From India’s dip to China’s rise: What September PMI data says about Asia’s factories

The latest set of data from S&P Global manufacturing PMI suggests that the region’s recovery remains two-speed—bolstered by domestic resilience in some economies, yet constrained by weak global demand.

Mint breaks down the numbers and the implications for Asia’s manufacturing outlook.

What do the latest PMI numbers show?

Asia’s largest manufacturing economies presented a mixed picture in September, underscoring the region’s uneven industrial recovery.

India’s manufacturing PMI eased to 57.7 from 59.3 in August, indicating continued expansion but at a slower pace. China’s reading rose to 51.2, its strongest in six months, hinting at tentative stabilization after months of softness, while South Korea returned to growth territory at 50.7, ending an eight-month contraction streak on the back of improving export orders.

In contrast, Japan’s factory activity (48.5) remained mired in contraction, weighed down by weak output and new orders. Malaysia (49.8) also stayed below the 50-point mark, signalling continued softness, while Vietnam (50.4) and Indonesia (50.4) hovered just above the expansion threshold, suggesting stabilization rather than renewed momentum.

Together, these readings highlight a region where industrial recovery is steady but uneven, with domestic demand cushioning some markets even as global trade headwinds persist.

Why did India’s PMI moderate?

Manufacturing momentum across Asia’s major producers, including India, Japan and Vietnam, eased in September, marking a normalization after the strong upturn seen earlier in the year. The moderation came as global demand softened and new US tariffs rippled through regional supply chains, weighing on export sentiment.

In India, the slowdown reflected monsoon-related disruptions and weaker external demand, though factory activity remained among the most resilient globally. Production and new orders continued to grow, but at a slower pace, mirroring trends across much of Asia. The data suggests that while the region’s factory engines are still running, their rhythm is changing amid shifting global trade dynamics.

“The September headline index (for India) softened, but it remained well above the long-term average. New export orders increased at a faster rate in September, indicating demand outside of the US might be offsetting any decline in demand from the US as a result of tariffs," said Pranjul Bhandari, Chief India Economist at HSBC,

“Business confidence, as indicated by expectations for future output, showed a big jump in September, potentially reflecting optimism about the boost in demand from the cuts in goods and services tax (GST), although US tariffs remain a strong headwind to the economy," she added.

Which countries saw improvement?

China and South Korea were at the forefront of Asia’s improving manufacturing sentiment in September, signalling tentative recovery in the region’s industrial base. In China, the official manufacturing PMI edged higher as factory output and new orders gained traction, pointing to early stabilization after months of uneven performance. The improvement reflected a gradual pickup in domestic demand and targeted policy measures aimed at supporting industrial activity, even as external conditions remained fragile.

South Korea, meanwhile, posted a notable rebound, with its PMI rising to 50.7—the first expansion since January—driven by recovering technology exports and the normalization of supply chains disrupted earlier in the year.

Together, the two economies offered cautious optimism, though the sustainability of this recovery will depend on how global demand and trade frictions evolve.

Why are Japan and Southeast Asia still struggling?

Export-dependent economies such as Japan, Malaysia and Vietnam continued to face headwinds from sluggish global demand, particularly for electronics, capital goods and intermediate components. Japan’s manufacturing PMI fell to 48.5 in September, underscoring persistent weakness in both domestic and overseas orders.

In Malaysia and Vietnam, muted external demand combined with rising input and energy costs to restrain production momentum. Even in economies where PMIs remained slightly above 50, indicating continued expansion, growth was modest and uneven. The broader picture points to a fragile recovery, with regional supply chains stabilizing but external orders yet to rebound meaningfully—a sign that Asia’s manufacturing revival remains constrained by lingering softness in global trade.

What does this mean for Asia’s recovery outlook?

Asia’s manufacturing data points to a gradual but uneven recovery, with domestic-demand-driven economies like India and, increasingly, China providing regional stability. Strong local consumption and policy support are cushioning the impact of weak global trade, but sluggish exports and an uncertain global outlook mean the rebound remains fragile and two-speed.

India’s factory activity eased slightly yet stayed robust, while China and South Korea regained momentum on improving orders and supply-chain recovery. Overall, Asia’s near-term trajectory will hinge on how quickly global demand revives and whether trade tensions, including new US tariffs, further disrupt export flows. For now, the outlook remains one of caution, with internal demand providing a floor, but not yet the lift, for a sustained industrial upswing.