A car factory line in Wuhan
Manufacturing sector in Asian region under downward pressure Reuters

The manufacturing sector in most Asian countries continued to deteriorate in June. India managed to stay in expansion territory but at a slower pace, as per Markit's latest data.

According to analysts, China needs more stimuli while the Reserve Bank of India is likely to cut rates further as both the countries need to bolster growth.

South Korea

The Nikkei Markit manufacturing PMI (purchasing managers' index) for South Korea fell to a 33-month low of 46.1 from the May reading of 47.8 as production and new orders dropped sharply while employment numbers declined at the quickest rate since November last year.

Markit said a number of panellists mentioned challenging economic conditions as the reason for the South Korean decline while some cited the Mers outbreak.


In Malaysia, the headline PMI posted its weakest reading in 32 months, Markit said, dragged by the decline in production and new orders. The index stood at 47.6, down from 49.5 in May.

The researcher said inflation of input and output prices remained solid amid reports of higher raw material costs and an increase in taxation.


The Indonesian PMI rose to 47.8 from 47.1. "The trend in employment moved closer to stabilising in June. However, it's still too early to call an end to the downturn and upcoming PMI releases will play an important role in identifying where manufacturing is heading later in 2015," said Pollyanna De Lima, a Markit economist.


Similarly, the China index rose to 49.4 from 49.2 but June was the fourth straight month in the below-50 mark which showed contraction. According to Markit, the decline was driven by the sharpest rate of job-shedding across the sector since early 2009, while output also fell slightly on the month.

Analysts believe that more easing may follow to bolster growth in the world's second largest economy.

"It is likely that more stimulus measures will be required to ensure that the sector can regain growth momentum and to encourage job creation," said Annabel Fiddes, an economist at Markit.


The Nikkei Markit index fell in India to 51.3 in June from the May reading of 52.6 but that was the twentieth consecutive above-50 print.

Markit said June saw only a moderate expansion of manufacturing output while recording its slowest rise in new work since September last year. Therefore, data still pointed to the need for easier monetary policy in the country.

"With price pressures being weak and growth losing steam, June's dataset suggests that the RBI's loosening cycle is, therefore, likely to continue," said Markit economist De Lima.


The Vietnamese PMI also dropped in June but remained in expansion territory.

The headline manufacturing index dipped to 52.2 from the May print of 54.8 in May, amid weaker rises in output and new orders while cost inflation remained weak, Markit said.

"While the Vietnamese PMI data for June are generally positive, there was a distinct slowdown in growth from the strong rates seen in April and May," said Andrew Harker, an analyst at Markit.