Factory activity bounced in August as AI fuelled Asian expansion

South Korea's PMI eased to 52.3 from 53.1, but was still above the 50 mark for a ninth month. The expansion was driven by exports, which rose 68.7% in August from a year earlier to expand for the 15th straight month, separate data showed on Tuesday. Global factory activity was humming last month as surging demand for AI hardware kept Asian factories busy while new orders in Europe bounced higher, brightening prospects even as the prolonged U.S.-Iran war fuels uncertainty, surveys showed on Tuesday. It was an upbeat picture in Asia as China, Japan and South Korea saw factory activity expand in August on solid demand for chips, computers and other AI-related products, helping offset mounting cost pressures from the conflict. China's RatingDog China General Manufacturing PMI, compiled by S&P Global, rose to 51.5 in August from 50.9, beating analysts' estimate of 51 in a Reuters poll. The reading reinforced signs AI-led demand is helping stabilise parts of China's industrial sector, although an official survey showed overall factory activity remained in contraction, underscoring the fragility of the broader recovery. Japan's manufacturing industry gathered momentum as new business grew at the fastest pace since January 2018 on solid demand for semiconductors and AI-related products. The S&P Global Japan Manufacturing PMI rose to 54.9 from 54.5, its highest since April and marking the eighth consecutive month of expansion, the survey showed. “Overall, the sector looks well placed to sustain its strong performance, particularly given demand linked to AI-related sectors,” said Annabel Fiddes, economics associate director at S&P Global Market Intelligence. South Korea saw activity expand for a ninth straight month due to robust export demand. Demand for euro zone manufactured goods was at an over four-year high in August, with factory growth hitting its fastest pace in more than four years. S&P Global's Eurozone Manufacturing Purchasing Managers' Index (PMI) rose to 52.7 in August from 51.9 in July, its highest reading since May 2022 but just shy of a preliminary estimate of 52.8. PMI readings above 50.0 indicate growth in activity. “The resilience story is still going on,” said Carsten Brzeski at ING. “It still reflects the fact European manufacturing companies, at least some of them, benefited from the fact Asian competitors are hurt more by the closure of the Strait of Hormuz.” Efforts by mediators including Qatar and Oman to broker a deal to reopen the key shipping route, which carried about a fifth of global oil supplies before the war erupted in late February, have so far proven inconclusive. Germany's PMI came in at 54.3 and France's rose to 51.1 from a sub-50 number in July. The British factory PMI slipped to 51.7. Germany also saw factory growth hit a more than four-year high, while France contributed to the overall expansion. On the other hand, Italy saw its first contraction since January and Spain was also in negative territory. In Britain, outside the European Union, activity growth slowed slightly but factories hired workers at the fastest pace in more than two years due to rising production requirements.

Factory activity bounced in August as AI fuelled Asian expansion

South Korea exports and global uncertainty

AI-related demand lifted factory activity across Asia

European manufacturing activity hit a more than four-year high

Related News

Hewlett Packard Enterprise Company <HPE.N>: Deutsche Bank initiates coverage with buy rating and target price $62

Xenia Hotels & Resorts, Inc. Cuts to Market Perform From Outperform; Cuts Target Price to $20.5 From $22

Medtronic boosts fiscal 2027 forecasts on heart device demand

Dell Technologies Inc <DELL.N>: Deutsche Bank Initiates Coverage With Hold Rating and Target Price $480

US Stocks-Wall St Futures Kick Off September Under Pressure as Yields, Oil Prices Rise