Asian factories get off to solid start in second quarter

Tue May 2, 2017 3:33am EDT
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By Rajesh Kumar Singh

NEW DELHI (Reuters) - Factories across much of Asia got off to a solid start in the second quarter, buoyed by strong global demand, particularly for hi-tech gadgets which are leading a sizzling rally in electronics.

Though China's manufacturing growth eased more than expected in April, business still improved and there were no hints of a sharp loss of momentum despite risks from a growing regulatory crackdown and fresh measures to cool its heated housing market.

Indeed, analysts chalked up much of the softening in China to recent falls in commodities prices, noting its official factory activity gauge at the weekend was still not far from a near five-year high.

Globally, continued strength in Asia and expectations for upbeat PMI readings from Europe later on Tuesday could help offset a recent soft patch in the U.S. economy, though many economists believe that weakness will be temporary.

"We expect global growth to pick up in the second quarter," said Krystal Tan, Asia economist at Capital Economics in Singapore.

"Firmer global growth will lend strength to the ongoing recovery in Asian manufacturing."

After six years of disappointing growth, the world economy is gaining momentum, fueled by a cyclical recovery in manufacturing and buoyant financial markets.

A multi-year trade recession for Asia's exporters has ended as global demand revives, though the outlook is still being clouded by worries about growing U.S. protectionism as the new Trump administration flexes its muscles.   Continued...

FILE PHOTO: A woman works at a textile factory in Xiangfan, Hubei province, China December 31, 2005.   REUTERS/Stringer/File Photo