Asia's Factory Activity Worsens as U.S. Trade Uncertainty Bites

Asia’s factory activity deteriorated in July as weak global demand and ongoing uncertainty over U.S. tariffs weighed on business confidence, recent private-sector surveys showed, clouding the outlook for the region’s fragile recovery, Leika Kihara reported for Reuters.

Factory activity shrank in export powerhouses Japan and South Korea, with July data highlighting the challenges facing Asia.

The surveys were conducted before Japan and South Korea reached trade agreements with Washington, offering some hope that easing uncertainty could help revive manufacturing in the coming months, according to analysts.

Factory activity shrank in export powerhouses Japan and South Korea, with July data highlighting the challenges facing Asia as President Donald Trump’s policies continue to undermine the global free trade system that has long fueled the region’s growth.

China’s factory sector also faltered in July. Slower business growth prompted manufacturers to scale back production—an ominous sign for the broader regional economy.

The S&P Global China General Manufacturing PMI fell to 49.5 in July from 50.4 in June, missing analysts' expectations and dipping below the 50-point threshold that separates expansion from contraction.

The reading followed an official survey showing that China’s manufacturing sector contracted for the fourth consecutive month in July. The data suggest that a recent export surge—fueled by a rush to ship goods ahead of anticipated higher U.S. tariffs—is fading, while domestic demand remains sluggish.