Asia’s manufacturing sector gained momentum in June as a global artificial intelligence investment boom drove demand for technology-related goods, helping offset some of the economic pressure caused by the Iran war, according to private surveys reported by Reuters on Wednesday.
The Reuters report said strong demand for chips, data-centre equipment and other technology products provided support for export-focused Asian economies facing rising geopolitical and supply chain risks. However, price pressures remained elevated as shortages of materials and shipping delays extended delivery times, raising concerns that energy-related disruptions linked to the Middle East conflict could increase costs across the region in the months ahead.
The latest survey results highlighted the growing influence of global AI investment on Asia’s economic performance. Demand linked to artificial intelligence development has created a major source of growth for manufacturers, with companies increasing purchases of technology equipment and building inventories to protect against possible shortages and price increases.
China, Japan and South Korea all recorded factory activity growth in June, supported by demand for semiconductors, computers and other AI-related products. Companies in these markets also increased stockpiling activity as businesses prepared for potential supply disruptions connected to the conflict in the Middle East.
China’s RatingDog General Manufacturing Purchasing Managers’ Index (PMI) rose to 51.7 in June, marking the seventh consecutive month of expansion, according to the private survey cited by Reuters. The reading was slightly below May’s 51.8 but exceeded the 51.6 forecast from analysts. A reading above 50 indicates expansion in manufacturing activity.
The private survey results followed an official survey released on Tuesday that showed China’s factory activity returned to growth in June, supported by stronger export orders.
“Overall, the manufacturing sector maintained a steady expansion in June, supported by sustained new order growth, easing cost pressures and improved labour market conditions,” Yao Yu, founder of RatingDog, said in comments on China’s PMI.
Japan’s manufacturing sector also recorded stronger growth, with its PMI increasing to 54.8 in June from 54.5 in May. The expansion continued for a sixth consecutive month, while new orders increased at their fastest pace in more than two years.
Despite the improvement in activity, Japan faced continued cost pressures. Input price inflation remained close to a four-year high in June, indicating rising expenses that could affect company margins and contribute to wider inflation pressures.
South Korea’s factory activity expanded for a seventh straight month, although growth slowed compared with May as export demand weakened. Usamah Bhatti, an economist at S&P Global Market Intelligence, said companies frequently reported that higher raw material prices, along with difficulties obtaining supplies due to shortages and delays, affected manufacturing performance.
Manufacturing activity also expanded in several emerging Asian economies. The Philippines recorded a PMI reading of 50.9 in June, compared with 50.8 in May, while Malaysia’s index increased to 50.7 from 49.9, according to the surveys cited by Reuters.
Taiwan and Vietnam also recorded manufacturing growth in June, adding to signs that technology demand continued to support regional factories despite challenges from geopolitical tensions, supply disruptions and rising costs.
The survey findings indicate that while the Iran war and related supply chain disruptions are creating new pressures for Asian manufacturers, the global AI-driven technology cycle is providing a significant source of demand and helping sustain industrial activity across the region.
