Factory activity across Asia continued to expand in October, but growth slowed in the region’s major chip exporters, according to private surveys published on Monday, in a sign that the artificial intelligence boom is no longer masking softer demand elsewhere in the economy.
The surveys point to growing strain on export-led economies. A prolonged conflict in the Middle East has kept fuel and food prices elevated, squeezing household spending and business confidence, even as orders for chips and AI-related goods have held up.
China’s private manufacturing gauge, the RatingDog General Manufacturing Purchasing Managers’ Index compiled by S&P Global, eased to 52.0 in October from 52.1 in September. A reading above 50 signals expansion, and the result beat the 51.6 forecast in a Reuters poll, though it was the slowest pace of growth in the survey in recent months.
The detail beneath the headline was mixed. Output rose at its fastest rate in six months, and new orders held broadly steady at 53.3, but growth in export orders slowed to a three-month low as makers of consumer and intermediate goods eased. Employment rose only marginally for a second month, while purchasing activity grew at its fastest pace since February and output prices fell as firms cut prices to support sales.
The private result contrasts with China’s official factory survey, published on Saturday, which showed manufacturing shrinking in October. The two surveys cover different samples of firms, and the gap between them underlines how uneven October’s slowdown was. This site reported the official contraction, and its result, on 31 October; the private survey reported here is the separate release that report was awaiting.
Elsewhere, the cooling was clearer. Japan’s manufacturing index eased to 53.3 from 54.1 in September, its slowest expansion in seven months, as output and new orders lost momentum. South Korea’s gauge fell to 51.3 from 53.9, its slowest growth in eight months on weaker output and demand, while Taiwan’s index dropped to 54.9 from 56.7. Vietnam, Indonesia and Malaysia, by contrast, expanded faster than in the previous month.
“Strong chip and AI demand had masked soft spots in Asian and global economies. But that’s becoming hard to sustain with the Middle East war dragging on for so long, pushing up fuel and food prices,” Toru Nishihama, chief emerging market economist at Dai-ichi Life Research Institute in Tokyo, told Reuters. He added that high inflation was hurting Asian consumption and that intense price competition from China was weighing on rival exporters such as Japan and South Korea.
Capital Economics’ China economist Nguyen Hoang Nam said the surveys suggested China’s economy lost momentum in October after September’s pick-up, with manufacturing softening slightly but foreign demand still looking resilient, while a sharp reversal in construction activity and expectations suggested firms had grown less confident that fiscal support would provide a substantial boost over the rest of the year.
The International Monetary Fund now expects Asia’s economy to grow 4.8% in 2026 and 4.4% in 2027, higher than projections made in April but still slowing from 5.0% in 2025, and has warned of heightened risks from an Iran war-induced energy shock and a potential correction in the AI boom.
Sources: Reuters, “Asia’s factory activity feels fading glimmer of AI boom”, 2 November 2026 (https://www.reuters.com/world/asia-pacific/global-economy-asias-factory-activity-feels-fading-glimmer-ai-boom-2026-11-02/); Reuters, “China factory growth slows in October as export orders ease, private PMI shows”, 2 November 2026 (https://www.reuters.com/world/asia-pacific/china-factory-growth-slows-october-export-orders-ease-private-pmi-shows-2026-11-02/)
