Japanese factory activity declined at the fastest pace in three years in October, prompted by a decrease in new orders, data out Wednesday showed. The report was another sign of weak global performance that may signal a recession is near even if a trade deal between the United States and China miraculously materializes. Total new orders in Japan declined at their fastest pace since December 2012, while factory output and future orders contracted in response. Japan’s economy was also battered by a typhoon that hit the country earlier in October and a sales take hike from 8 percent to 10 percent that inhibited spending. Taken together, the Japanese data may be the push that the Bank of Japan needs to implement new stimulus measures into the country’s economy.
Also on Wednesday, the International Monetary Fund expressed concerns about growth in other areas of Asia, announcing that economic growth could slow worse than originally predicted. The IMF predicted Hong Kong’s growth this year to be as little as 0.3 percent, 2.4 percent lower than its original projection for the year. The downward projection comes after months of political unrest coupled with impacts from the current trade war. Carrie Lam, the current Chief Executive of Hong Kong announced earlier this month that Hong Kong has fallen into a technical recession.
South Korea’s annual growth could be a mere 2 percent, 0.6 percent lower than original forecasts, the IMF report showed, while Singapore’s economic growth outlook was revised to as low as 0.5 percent.
Domestic demand in Asia has held up fairly well this year, but exports and investments have been “weakened significantly” since the start of the trade war which has hurt both local economies and the wider Asian economy. Asian markets were mixed in the early afternoon on Thursday, with South Korea’s Kospi down 0.08 percent and the Shanghai Composite down 0.22 percent as of 1:06 p.m. HK/SIN. The Shenzhen Composite was down 0.38 percent. On the positive side, Japan’s Nikkei 225 was up 0.59 percent and Hong Kong’s Hang Seng Index gained 0.47 percent. Australia’s ASX 200 was up 0.29 percent.
On the commodities markets, oil futures slumped on Thursday, a move prompted by reports for weak demand. U.S. WTI futures were down 0.80 percent to $55.52 per barrel while Brent crude futures were down 0.52 percent to $60.85 per barrel. On Wednesday the Energy Information Administration announced that U.S. crude inventories declined by 1.7 million barrels last week, negating analysts’ forecasts of an increase by 2.2 million barrels. The data sent oil markets up nearly 2 percent on Wednesday.