China's factory
activity shrank for a 10th straight month in December as surveys across
Asia showed industry struggling with slack demand even as the policy
cupboard is looking increasingly bare of fresh stimulus.
Uncertainty
over the economic outlook was exacerbated by a flare up in tensions
between Saudi Arabia and Iran, that has sent investors scurrying from
stocks to safe havens such as the Japanese yen.
The Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) slipped to 48.2 in December, below market forecasts of 49.0 and down from November's 48.6.
That was the lowest reading since September and well below the 50-point level which demarcates contraction from expansion. It followed a fractional increase in the official PMI to 49.7.
There was a faint stirring of hope as PMIs in South Korea and Taiwan both edged above the 50 mark, though more thanks to a pick up in domestic demand than any revival in exports.
Weighed down by weak demand at home and abroad, factory overcapacity and cooling investment, China is expected to post its weakest economic growth in 25 years in 2015, with the rate of expansion slipping to around 7 percent from 7.3 percent in 2014.
A marked pick up in service activity also helped spare Singapore's blushes by rescuing growth last quarter. The city-state's economy expanded by an annualized 5.7 percent in the fourth quarter, far above market expectations thanks to a 6.5 percent jump in services.
China does have room to ease reserve requirements for banks and loosen government purse strings. It has also been steadily nudging its currency lower.
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| A worker drives a forklift to transport aluminum bars at a factory in Anshun, Guizhou province, China, July 1, 2013. |
The Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) slipped to 48.2 in December, below market forecasts of 49.0 and down from November's 48.6.
That was the lowest reading since September and well below the 50-point level which demarcates contraction from expansion. It followed a fractional increase in the official PMI to 49.7.
There was a faint stirring of hope as PMIs in South Korea and Taiwan both edged above the 50 mark, though more thanks to a pick up in domestic demand than any revival in exports.
Weighed down by weak demand at home and abroad, factory overcapacity and cooling investment, China is expected to post its weakest economic growth in 25 years in 2015, with the rate of expansion slipping to around 7 percent from 7.3 percent in 2014.
A marked pick up in service activity also helped spare Singapore's blushes by rescuing growth last quarter. The city-state's economy expanded by an annualized 5.7 percent in the fourth quarter, far above market expectations thanks to a 6.5 percent jump in services.
China does have room to ease reserve requirements for banks and loosen government purse strings. It has also been steadily nudging its currency lower.
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