A surge in global demand for artificial intelligence-related products helped drive growth in Asia’s manufacturing sector in June, cushioning export-dependent economies from the impact of the Iran conflict and wider geopolitical uncertainty, private business surveys showed on Wednesday.
Strong demand for semiconductors, data-centre equipment and other technology products has become a major growth driver for Asian manufacturers, helping offset weaker areas of the economy affected by rising costs, supply disruptions and trade risks.
However, price pressures remained elevated across the region as shortages of materials and shipping delays extended delivery times, raising concerns that the energy shock linked to the Middle East conflict could worsen in the coming months.
The latest surveys highlighted how the global AI investment cycle is reshaping Asia’s economic outlook, with countries such as China, Japan and South Korea benefiting from increased demand for advanced technology goods.
China’s RatingDog General Manufacturing Purchasing Managers’ Index (PMI) rose to 51.7 in June, marking a seventh consecutive month of expansion. The reading was slightly below May’s 51.8 but exceeded market expectations of 51.6.
More Read
The figure indicated continued growth in China’s manufacturing sector, supported by strong new orders, easing cost pressures and improving labour market conditions, according to RatingDog founder Yao Yu.
The private survey followed official data released on Tuesday showing China’s factory activity returned to expansion in June, helped by stronger export orders.
Japan’s manufacturing sector also strengthened, with its PMI increasing to 54.8 in June from 54.5 in May. Factory activity expanded for a sixth straight month, while new orders recorded their fastest growth in more than two years.
More Read
Despite the positive momentum, Japanese manufacturers faced rising costs, with input price inflation reaching its highest level in nearly four years. Businesses warned that higher expenses could reduce profit margins and eventually contribute to broader inflation.
South Korea also recorded manufacturing growth for the seventh consecutive month, although expansion slowed compared with May as export demand weakened.
“Firms frequently reported that rising raw material prices, alongside difficulties sourcing and receiving inputs due to delays and shortages, weighed on sector performance,” said Usamah Bhatti, an economist at S&P Global Market Intelligence.
Manufacturing activity across several emerging Asian economies remained positive. The Philippines’ factory PMI was largely unchanged at 50.9 in June from 50.8 in May, while Malaysia’s index improved to 50.7 from 49.9.
Taiwan and Vietnam also recorded manufacturing expansion during the month, supported by technology-related demand.
Analysts said the AI-driven manufacturing boom is providing a crucial source of resilience for Asian economies, but warned that continued supply disruptions, energy costs and geopolitical tensions could create challenges if they persist.
