China's manufacturing activity expanded only slightly last month, raising concerns a nascent economic recovery may be foundering at a time of market uncertainty about a U.S. government shutdown and a political crisis in Italy.
Similar purchasing managers indexes measuring the factory sectors in India, South Korea and Taiwan rose modestly, although the improvements were not enough to give much comfort.
The one bright spot for Asia was in Japan, where a report said on Monday that manufacturing activity expanded in September at its fastest pace since the 2011 earthquake and tsunami.
China's official PMI rose to 51.1 in September from 51.0 in August, data showed on Tuesday. That was still the highest in 17 months, but the increase was less than expected.
A separate China PMI from HSBC on Monday also showed manufacturing activity growing less than expected last month on soft domestic demand.
"The question is how sustainable is the recovery," said Haibin Zhu, chief China economist for JP Morgan in Hong Kong.
"We are still cautious. We see the recovery peaking in Q3 and slowing in Q4 on a sequential basis."
China's economy has shown signs of picking up but the PMI figures suggest it is struggling for momentum. Analysts like Zhu have warned China's economic rebound could be short-lived. Unlike in the past, the government is reluctant to implement strong stimulus policies that could come back to haunt it longer term.
China's struggle adds to a complicated global economic environment for policy makers and investors. The U.S. government began a partial shutdown on Tuesday for the first time in 17 years after lawmakers could not break a political stalemate over spending. It faces another critical deadline in coming weeks to raise its debt ceiling of $16.7 trillion. Failure to find an agreement could lead to a historic U.S. government debt default.
Source: Reuters
