By Leika Kihara

TOKYO (Reuters – Asian factory activity grew as the crippling supply chain bottlenecks receded. But rising input prices and renewed weakness from China hampered regional prospects of a quick, sustained recovery after pandemic paralysis.

Omicron coronavirus has been detected in the region. This is a new concern for policymakers who already have to deal with the challenges of steering the economies from the ruts and taming inflation, rising commodity prices, and parts shortages.

China’s factory activity contracted again in November, according to Wednesday’s private Caixin/Markit Manufacturing Purchasing Manages’ Index. The PMI showed that this was due to lower demand and high prices.

These findings, which are more focused on coastal small businesses, were in stark contrast to those from China’s official PMI, Tuesday, that revealed unexpectedly increased manufacturing activity in November at an even modest rate.

Wang Zhe (senior economist, Caixin Insight, Group) stated that “Releasing constraints on the supply side and especially the easing the power crunch has accelerated the pace of production recovery.” He made this statement in conjunction with the release of data.

“But the demand was fairly weak and suppressed by COVID-19’s epidemic, rising product prices, and so on.”

However, beyond China, manufacturing activity appeared to be improving with the expansion of PMIs in Japan, South Korea Vietnam, and the Philippines.

Japan’s PMI rose from 53.2 to 54.5 in October to 54.5 in November. This is the fastest expansion rate in almost four years.

South Korea’s PMI rose to 50.9 in October from 50.2 in Oct. This is above the threshold of 50 that signifies an expansion in activity. It has remained at or near the 50 mark for the 14th consecutive month.

South Korea saw its output fall for the second month straight as Asia’s fourth-largest country struggles to recover momentum from persistent supply chain disruptions.

Capital Economics’ emerging Asia economist Alex Holmes stated that “Overall there are plenty of opportunities for an overall rebound in regional industrial,” citing new orders flooding back into countries previously hit by the Delta epidemics, and disruptions further down the supply chain still functioning through.

Vietnam’s PMI increased from 52.1 to 52.2 to November, and the Philippines saw a 51.7 increase to 51.0.

The manufacturing sector in Taiwan continued its expansion in November, but it was slower than October’s 55.2. Indonesia saw a similar picture with its PMI dropping to 53.9 in November from 57.2 October.

It is likely that the November surveys did not include the Omicron strain spreading, which could put further pressure on pandemic-disrupted supply chain chains. Many countries have imposed new border controls in order to keep themselves out of danger.