Asia's factory activity shrinks as US tariffs bite, China bucks trend

US tariffs took a toll on factory activity across Asia, overshadowing a surprisingly upbeat performance in China, private surveys showed on Monday, keeping pressure on policymakers to underpin the region's fragile economic recovery.

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The outcome reinforces concerns that manufacturers in Asia, which have been front-loading shipments to beat higher US levies, will struggle to grow profits as exports weaken in the months ahead, analysts say.

Export powerhouse Japan, South Korea and Taiwan all saw manufacturing activity shrink in August, the surveys showed, underscoring the challenge Asia faces in weathering the hit from President Donald Trump's tariffs.

"It's a double-whammy for Asian economies, as they face higher US tariffs and competition from cheap Chinese exports," said Toru Nishihama, chief emerging market economist at Dai-ichi Life Research Institute.

"We'll likely see the hit from US tariffs intensify going forward, with countries reliant on US-bound shipments like Thailand and South Korea particularly vulnerable," he said.

The Rating Dog China General Manufacturing PMI, compiled by S&P Global, rose to 50.5 in August from 49.5 in July, beating market forecasts and exceeding the 50-mark that separates growth from contraction.

The reading confounds an official survey on Sunday that showed China’s manufacturing activity shrank for a fifth straight month in August on weak domestic demand and uncertainty over the outcome of Beijing's trade deal with the US