Export slump hits Asia factories

 
City A.M. Reporter
A factory slump in Asia's two biggest exporters China and Japan deepened in June as crumbling orders from abroad dragged activity to seven-month lows, heightening worries that the health of the global economy is deteriorating.

PMI reports on major exporters South Korea and Taiwan also indicated new orders from overseas were falling. The manufacturing sectors in these countries contracted in June for the first time in five months, the reports showed.

In India, where the economy is more reliant on domestic activity, the factory sector picked up in June. But its new export orders growth was the weakest in seven months.

The data increases the risk that the economies of major demand centres Europe and the United States may be weaker than previously thought. Purchasing managers' reports on the two regions are due to be published later on Monday.

The latest sign that China's economy is struggling came on Monday with a private purchasing managers' index (PMI) showing factory activity shrank at its fastest pace in seven months in June. The index slipped to 48.2 from May's 48.4.

The drop was driven by new export orders skidding to depths last seen in March 2009 as demand at home and abroad wilted. The slump dragged prices of finished products from Chinese factories to 42-month lows.