Factory activity contracts for third straight month

In the IHS Markit Malaysia Manufacturing Purchasing Managers’ Index for June the country registered a score of 51.0 up sharply from the 45.6 in May

In the IHS Markit Malaysia Manufacturing Purchasing Managers’ Index for June the country registered a score of 51.0 up sharply from the 45.6 in May

Asian shares were mostly higher on Wednesday after Wall Street capped its best quarter since 1998, shrugging off continued signs of global economic damage from the coronavirus pandemic.

Factory activity in the US surged higher than expected in June, suggesting that the broader economy grew for the second consecutive month after April's contraction.

A number of factories here reopened in June, the AIB IHS Markit manufacturing Purchasing Managers' Index (PMI) survey found. The construction sector business activity index landed above 59 for the third consecutive month.

Markets have continued gaining despite signs global economies are ailing seriously because of the outbreak, with uncertainty still the new normal as reported cases keep surging around the world while no cure or vaccine for Covid-19 is available. "However, the recent spike in new coronavirus cases and the resulting lockdown extensions have seen demand continue to weaken", noted Eliot Kerr, an economist at IHS Markit.

Asia's factory managers saw glimmers of hope last month, with the region's purchasing managers' indexes (PMIs) turning up across the board as demand from China picked up.

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However higher production was not matched by a rise in employment in June, with one in five firms cutting staff, albeit down from 29% in May and 41% in April, the survey showed.

The economy here has opened more gradually than much of Europe with large parts of the services sector including hotels, restaurants, hairdressers and most pubs only resuming trading this week.

USA and global stocks kicked off the third quarter on an upbeat note on Wednesday although optimism over the improving economic data was held in check by worry the surging US coronavirus cases could derail the world's recovery before it properly begins.

Manufacturing activity also expanded in Vietnam and Malaysia, pointing to a slow but steady recovery ahead. Analysts had expected it to slow to 50.4. The index for new export orders rose by more than seven percentage points to 42.6 for the month of June, but remained below the critical point, according NBS senior official Zhao Qinghe.

Separately, a Bank of Japan survey showed big manufacturers' confidence sinking to levels last seen during the 2009 global financial crisis, reinforcing expectations the country was sinking deeper into recession. "That will delay Japan's economic recovery, which could end up in L-shape".

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