Southeast Asia factories gain momentum as Japan, South Korea face slowdown

By Katia Dmitrieva

 

Asia’s manufacturing activity split across the region’s various hubs in August with Indonesia and Thailand powering ahead while South Korea and Japan cooled as tariffs weighed on output.

 

In Indonesia, output and new orders increased for the first time in five months and production in Thailand rose at the fastest pace in 13 months, according to S&P Global data published Monday. Overall activity in South Korea, Japan and Taiwan remained below the 50-mark that is the midpoint between expansion and contraction.  

 

Asian producers have been whipsawed by US tariffs this year, and August marked the arrival of President Donald Trump’s so-called “reciprocal” tariffs on nations around the world. Overall exports have eased in recent months after a surge earlier in the year as firms sought to get ahead of the levies.

 

 

The impact of higher US import duties varied across the region: In Japan, new export orders contracted at the quickest pace since March 2024, with reduced demand from Europe, China and the US. In South Korea, the decline was the biggest since April. Even in Thailand, a surge in new orders was led by domestic demand, as new export orders fell for the first time since April.

 

Meanwhile, Indonesia strengthened as overall activity expanded for the first time since March, allowing firms to raise prices by the most in about a year. New export orders rose at the steepest rate since September 2023 and companies remained optimistic for the year. In recent days, though, widespread protests have gripped the nation on inequality and labor concerns. 

 

Vietnam and Malaysia PMIs are reported later in the week and will provide a fuller picture of activity in the region.