By Leika Kihara

TOKYO, Reuters – Asia’s manufacturing activity grew as COVID-19 infection rates receded in emerging countries. However, rising input costs and material shortages, along with slowing Chinese growth, clouded the outlook according to business survey results released Monday.

The region’s policymakers are under pressure on many fronts. As they attempt to lift their economies from the pandemic-induced depression, while trying to maintain control over rising commodity prices and parts shortages, the price of living is also being controlled.

China’s factory activity grew at the fastest rate in four months, in October according to the Caixin/Markit Manufacturing Purchasing Managements’ Index (PMI). This was due to a decrease in COVID-19 case numbers, which drove up domestic demand.

A sub-index of output indicated that production fell for the third consecutive month because of power shortages, rising costs and falling wages. This is in contrast to Sunday’s official PMI which showed more factory activity than was expected.

Wang Zhe (senior economist, CaixinInsight Group) stated that shortages of raw materials and high commodity prices combined with problems in electricity supply created severe constraints for manufacturers, disrupting supply chains.

As operations recovered from the shutdowns triggered by an increase of COVID-19, factories in Vietnam, Indonesia, and Malaysia saw increased activity in October.

Taiwan witnessed a rapid increase in manufacturing activity due to robust chip demand. Japan saw its factory activity expand at an impressive pace over six months in Oct, which was a good sign for Japan’s third largest economy.

South Korea’s factories activity showed signs of Asia’s patchy recovery. It rose at an unusually slow pace over the past 13 months due to shrinking outputs and softer demand.

Japan’s output prices rose by more than 13 percent due to material shortages, delivery delays and other factors.

Capital Economics’ emerging Asia economist Alex Holmes stated that while October Manufacturing PMIs indicate a strong increase in manufacturing output, the industry will likely be dealing with huge backlogs for months to come, and supply shortages further afield will continue.”

The last au Jibun Bank Japan PMI for October was 53.2, up from 51.5 in previous months. It has expanded for the ninth month in a row.

South Korea’s PMI fell to 50.2 from 52.4 in September. However, it still managed to surpass the threshold of 50 that signals expansion of activity for a thirteenth consecutive month.

According to surveys, Vietnam’s PMI increased to 52.1 in September from 40.2, and Indonesia’s to 57.2 from 52.2, respectively. Malaysia’s index was 52.2. This is an increase of 48.1.

Asia’s developing economies are slower than advanced countries in recovering from the pandemic’s pain due to delays in vaccine rollouts. A spike in Delta variant case numbers has also hurt factory production and consumption.