Asia's factories showed few signs of returning to health in August, as torpid activity in the region's biggest economies, China and Japan, suggested world demand remained fitful at best even as global policymakers scrambled to restore momentum.
Coming a week after the US posted sluggish second quarter growth, Asia's uninspiring manufacturing surveys may give Federal Reserve Chair Janet Yellen pause for thought ahead of a Fed meeting on 20-21 September to decide whether or not to raise interest rates.
Moreover, the still-unknown impact of Britain's shock decision in June to quit the European Union is seen chilling already soft consumption, leaving factories struggling to clear their goods.
In China, the world's second-biggest economy, factory activity showed scant growth.
The official Purchasing Managers' Index (PMI) ticked up to 50.4 in August, compared with the previous month's 49.9 and just above the 50-point mark that separates growth from contraction.
But the private Caixin version of the PMI, which covers a greater share of smaller firms, showed activity stagnated last month with the index at 50.0, from an unexpectedly upbeat 50.6 in July.
"Downward pressure on China’s economy remains and government support to stabilize growth must continue," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note accompanying the Caixin PMI report.
Indeed, with central banks almost exhausting their monetary policy support, governments in Asia have increased fiscal stimulus although underlying demand in many of the region's export-reliant economies remain weak.
"A still subdued external demand environment and fading policy pass-throughs is weighing on aggregate demand in the region," said Chetan Ahya, senior economist at Morgan Stanley.
"In the near-term, the growth trajectory will depend on the trend in external demand, and monetary and fiscal policy response."
