ASIAN factory activity expanded moderately in December thanks to robust demand in regional giant China, business surveys showed yesterday, the latest sign that manufacturers are emerging from the initial damage of the COVID-19 pandemic.

But Chinese factory growth slowed and tougher coronavirus control measures put in place or being considered across the world clouded the outlook, keeping Asian policymakers under pressure to maintain or ramp up massive stimulus programs.

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell in December to 53, its lowest level in three months, but stayed well above the 50-level that separates growth from contraction.

The reading, which was lower than November’s 54.9, fell roughly in line with the official gauge of factory activity that showed activity moderating at a high level.

Robust demand in China helped manufacturing activity rise in neighboring economies like Japan and South Korea, according to the PMI surveys, in a glimmer of hope for Asia’s recovery prospects.

The final au Jibun Bank Japan PMI rose to a seasonally adjusted 50 in December from the previous month’s 49, ending a record 19-month run of declines as output stabilized for the first time in two years.

“Japanese manufacturers signalled a broad stabilization in operating conditions at the end of a tumultuous year,” said Usamah Bhatti, economist at IHS Markit.

Japan’s PMI survey also showed overall new orders declined at the softest pace since December 2018. Growth expectations for the year ahead rose on hopes that the COVID-19-induced downturn will fade and new product launches will stimulate demand.

“Businesses reported a sustained increase in optimism, with a third of respondents predicting a rise in output over the coming 12 months,” Bhatti said.

India said yesterday the Nikkei Manufacturing Purchasing Managers’ Index rose to 56.4 in December from November’s 56.3, above the 50-level separating growth from contraction for a fifth month.

“The latest PMI results for the Indian manufacturing sector continued to point to an economy on the mend, as a supportive demand environment and firms’ efforts to rebuild safety stocks underpinned another sharp rise in production,” noted Pollyanna De Lima, economics associate director at IHS Markit.

Manufacturing has been one of the main engines driving a recovery in India, Asia’s third-largest economy, after a coronavirus-induced slump early in the year. Business activity is slowly improving after contracting at an annual pace of 23.9 percent and 7.5 percent respectively in the April-June and July-September quarters.

China’s industrial sector has staged an impressive recovery from the coronavirus shock thanks to surprisingly strong exports, helping brighten prospects for Asia’s recovery.

But a resurgence of infections is forcing some Western countries to reimpose strict controls on economic activity, clouding the outlook for exports including those from China.

Japan may join other countries in applying tighter restrictions with Prime Minister Yoshihide Suga signalling yesterday the chance of declaring a state of emergency for Tokyo and three surrounding prefectures. (SD-Agencies)