India's PMI falls, China rises: Is Asia's factory recovery taking shape?

Copyright © HT Digital Streams Limited All rights reserved. Currency Explainer | From India’s decline to China’s rise: What September PMI data says about Asia’s factories Rhik Kundu 4 min read 17 Oct 2025, 11:31 am IST Asia’s manufacturing data points to a gradual but uneven recovery, (AI-generated image for representative purposes) Summary Asia’s manufacturing recovery in September shows and India’s manufacturing slightly mixed and China Korea’s recovery regain momentum. Munt breaks down the numbers and what they mean for the region’s factories. NEW DELHI: Asia’s factory activity in September reflected a patchy but stabilizing trend. India’s manufacturing expansion slowed slightly, while China and South Korea showed early signs of revival. The latest set of data from S&P Global manufacturing PMI suggests the region’s recovery remains two-speed – boosted by domestic resilience in some economies but limited by weak global demand. Munt breaks down the numbers and the implications for Asia’s manufacturing outlook. What do the latest PMI figures show? Asia’s largest manufacturing economies presented a mixed picture in September, underscoring the region’s uneven industrial recovery. India’s manufacturing PMI eased to 57.7 from 59.3 in August, indicating continued expansion but at a slower pace. China’s reading rose to 51.2, its strongest in six months, indicating tentative stabilization after months of softness, while South Korea returned to growth territory at 50.7, ending an eight-month contraction on the back of improved export orders. In contrast, Japan’s factory activity (48.5) remained in contraction, weighed down by weak output and new orders. Malaysia (49.8) also remained below the 50-point mark, indicating continued softness, while Vietnam (50.4) and Indonesia (50.4) hovered just above the expansion threshold, suggesting stabilization rather than renewed momentum. Together, these readings highlight a region where industrial recovery is steady but uneven, with domestic demand dampening some markets even as global trade headwinds continue. Why has India’s PMI moderated? Manufacturing momentum in Asia’s major producers, including India, Japan and Vietnam, eased in September, marking a normalization after the strong upswing seen earlier in the year. The moderation came as global demand softened and new US tariffs rippled through local supply chains, weighing on export sentiment. In India, the slowdown reflected monsoon-related disruptions and weaker external demand, although factory activity remained among the most resilient globally. Production and new orders continued to grow, but at a slower pace, reflecting trends in much of Asia. The data suggests that while the region’s factory engines are still running, their rhythm is changing amid shifting global trade dynamics. “The September commodity index (for India) softened, but it remained well above the long-term average. New export orders increased at a faster pace in September, indicating that demand outside the US could offset any decline in demand from the US due to tariffs,” said Pranjul Bhandari, India Chief Economist at HSBC, “Business confidence shows, in September. potentially that reflects optimism about the boost in demand from the reductions in Goods and Services Tax (GST), although US tariffs remain a strong headwind for the economy,” she added. Which countries have seen improvement? China and South Korea led Asia’s improved manufacturing sentiment in September, indicating tentative recovery in the region’s industrial base. In China, the official manufacturing PMI edged higher as factory output and new orders gained traction, signaling early stabilization after months of uneven performance. The improvement reflects a gradual increase in domestic demand and targeted policy measures aimed at supporting industrial activity, even as external conditions remained fragile. South Korea, meanwhile, made a notable recovery, with its PMI rising to 50.7 – the first expansion since January – driven by the recovery of technology exports and the normalization of supply chains disrupted earlier in the year. Together, the two economies offered cautious optimism, although the sustainability of this recovery will depend on how global demand and trade frictions develop. Why are Japan and Southeast Asia still struggling? Export-dependent economies such as Japan, Malaysia and Vietnam continued to face the headwinds of sluggish global demand, particularly for electronics, capital goods and intermediate components. Japan’s manufacturing PMI fell to 48.5 in September, underscoring continued weakness in both domestic and overseas orders. In Malaysia and Vietnam, subdued external demand combined with rising input and energy costs to limit production momentum. Even in economies where PMIs remained slightly above 50, indicating continued expansion, growth was modest and uneven. The broader picture suggests a fragile recovery, with domestic supply chains stabilizing but external orders yet to recover meaningfully – a sign that Asia’s manufacturing revival is constrained by lingering softness in global trade. What does this mean for Asia’s recovery prospects? Asia’s manufacturing data suggests a gradual but uneven recovery, with domestic demand-driven economies such as India and, increasingly, China providing regional stability. Strong domestic consumption and policy support are cushioning the impact of weak global trade, but sluggish exports and an uncertain global outlook mean the recovery remains fragile and two-paced. India’s factory activity eased slightly but remained strong, while China and South Korea regained momentum with improved orders and supply chain repairs. Overall, Asia’s near-term trajectory will depend on how quickly global demand revives and whether trade tensions, including new US tariffs, further disrupt export flows. For now, the outlook remains one of caution, with domestic demand providing a floor, but not yet the lift, for a sustained industrial upswing. Get all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download the Mint News app to get daily market updates. more topics #economy #manufacturing #PMI data #Manufacturingoutput #mint-explainer Read next story