Export-reliant economies, including Taiwan and Vietnam, saw their purchasing managers index (PMI) figures deteriorate further, with factories reporting a continued decline in new orders, output and staffing as the trade war saps demand.
Taiwan’s PMI slipped to 47.2 in June from 48.6 in May, according to surveys published today by S&P Global.
New business and new export sales declined at sharper rates, “with companies frequently commenting on reduced customer demand at home and overseas amid tariff concerns and client hesitancy,” said S&P Global Market Intelligence’s Annabel Fiddes.
Even for manufacturing heavyweight South Korea, which saw its PMI reading climb to 48.7 in June from May’s 47.7, the gauge was still well below the 50 threshold that separates expansion and contraction.
“Firms saw ‘pockets of improvement’ in the domestic market, but international demand remained sluggish,” S&P Global said.
The country’s exports rebounded a tad in June partly on front-loading before US President Donald Trump’s reciprocal tariffs rise.
Others that remained firmly in contraction territory were Vietnam, Malaysia and Indonesia, which posted the region’s worst PMI of 46.9 in June.
The latest data are a warning sign for Asia, the world’s factory floor, as a three-month grace period on Trump reciprocal tariffs is set to end on July 9.
Washington has pledged to announce more agreements after the July 4 holiday that would add to broad frameworks secured with China and the UK.
Still, uncertainty is rife, with Trump targeting Japan in his latest round of brinkmanship on Monday.
He threatened to impose fresh tariffs, citing the nation’s unwillingness to accept US rice exports.
Across-the-board duties on Japan goods imported to the US will rise to 24% on July 9, barring a deal.
Higher tariffs will cloud the outlook for Japan, which just saw manufacturing activity stabilise in June.
Its PMI climbed to 50.1, its highest reading since May 2024 and crossing over to expansion territory as factories aired confidence for the year ahead.
While Japan raised staffing and output in June, “we will need to see a renewed and sustained improvement in customer demand, which remains dampened by ongoing uncertainty regarding US tariffs, in order to see a sustained recovery in production,” Fiddes said.