Asian factory activity expands thanks to global AI boom

TOKYO — Factory activity in Asia surged in September due to the global artificial intelligence (AI) boom, according to private surveys released on Thursday. Policymakers found some respite from the persistent cost pressures stemming from the conflict between the U.S. and Israel against Iran. However, a surge in energy prices cast a shadow over the economic outlook worldwide.

Japan, South Korea, and Taiwan, which are major exporters, experienced expansions in manufacturing activity driven by strong demand for chips and AI-related products. China also reported a rise in factory activity in September as disruptions due to weather allowed factories to resume operations.

South Korea's manufacturing index, published by S&P Global, climbed to 53.9 in September, marking the largest increase in four months. New orders and production growth hit their highest levels in around five-and-a-half years. Usamah Bhatti, an economist at S&P Global Market Intelligence, noted that the expansions were attributed to the combined strength of the semiconductor and automotive sectors.

South Korea's purchasing managers index (PMI) rose to 53.9 from 52.3 in August, the highest level since May. The index remained above 50, signifying expansion, for the 10th consecutive month. Taiwan also benefited from the global AI boom, with its PMI reaching 56.7 in September, up from 54.7 in August. Japan's PMI stood at 54.1 in September, down from 54.9 in August, marking the weakest pace of expansion in six months due to slowing output and new orders.

Despite the slowdown, overseas demand remained robust, with new export orders increasing for the ninth consecutive month due to strong demand in Asia and improved sales to the U.S.

Indonesia and Vietnam saw an expansion in factory activity, while the Philippines and Malaysia contracted.