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China Caixin PMI grows in August in contrast to official

survey

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Chip producers South Korea, Taiwan see PMI expand in

August

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Japan's factory activity contracts at milder pace

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U.S. slowdown, election uncertainty cloud outlook for Asia

By Leika Kihara

TOKYO, Sept 2 (Reuters) - Asian factories, including

China's manufacturing sector, showed signs of a tentative

recovery in August and chip makers benefitted from firm demand,

private surveys showed on Monday, but economic headwinds loom.

Analysts say prospects of slowing U.S. growth, which is

likely to lead to interest rate cuts by the Federal Reserve this

month, and uncertainty over the outcome of the U.S. presidential

election cloud the trade outlook.

China's Caixin/S&P Global manufacturing purchasing managers'

index (PMI) rose to 50.4 in August from 49.8 in July, the

private survey showed on Monday, beating analysts' forecasts and

exceeding the 50 mark that separates growth from contraction.

The reading, which mostly covers smaller, export-oriented

firms, shows a more optimistic view than an official PMI survey

released on Saturday, which indicated an ongoing decline in

manufacturing activity in August.

"The PMIs for August suggest that economic momentum held

broadly steady last month, with modest improvements in

manufacturing and services helping to offset a further slowdown

in construction activity," Gabriel Ng, assistant economist at

Capital Economics, said in a research note on China's PMI.

"But with factory gate price declines accelerating, the

economy clearly remains at risk of slipping back into

deflation," Ng said.

Factory activity in South Korea and Taiwan also expanded in

August, while Japan saw a slower rate of contraction due in part

to solid global demand for semiconductors.

Japanese manufacturers also gained from a rebound in car

output after a safety scandal led some plants to temporarily

suspend production.

But manufacturing activity contracted in Malaysia and

Indonesia, the surveys showed, underscoring the pain some of the

region's economies are facing from China's prolonged slowdown.

"Chip-producing countries are doing fairly well, but China's

slowdown will continue to drag on Asia's manufacturing activity

for quite some time," said Toru Nishihama, chief emerging market

economist at Dai-ichi Life Research Institute.

"Slowing U.S. demand could add to the pain on Asian

economies, many of which are already wary of the fallout from

sluggish Chinese growth," he said.

Japan's final au Jibun Bank Japan manufacturing PMI rose to

49.8 in August, contracting for a second straight month but less

sharply than in July when the index reached 49.1.

South Korea's PMI stood at 51.9 in August, up from 51.4 in

July, due in part to strong customer confidence and new orders

in the domestic market, the private survey showed.

Malaysia's PMI stood at 49.7 in August, flat from the

previous month, while that of Indonesia fell to 48.9 from 49.3

in July, the surveys showed.

India's manufacturing activity growth eased to a three-month

low in August as demand softened significantly, casting another

shadow over the otherwise robust economic outlook.

The International Monetary Fund (IMF) anticipates a soft

landing for Asia's economies as moderating inflation creates

room for central banks to ease monetary policies to support

growth. It predicts growth in the region to slow from 5% in 2023

to 4.5% this year and 4.3% in 2025.