BEIJING, September 2 — Fresh manufacturing data from across East Asia show artificial intelligence demand is providing a partial buffer against broader economic headwinds, with factory gauges in China, Japan, and South Korea all registering expansion in August even as energy costs tied to the Middle East conflict continue to climb. The readings, released on Tuesday, point to a regional divergence. AI-related purchases of microchips, computers, and associated equipment are lifting specific industrial segments.
Yet the data also expose fragility underneath, particularly in China where an official survey showed overall factory activity still contracting despite private-sector strength.
China’s Split Picture
The Caixin China General Manufacturing PMI, compiled by S&P Global, climbed to 51.5 in August from 50.9 in July. That beat the 50-point mark dividing growth from contraction, and exceeded analysts’ expectations of 51. The data suggest AI-related demand is helping stabilize certain segments of Chinese industry.
Still, the broader picture remains uneven. An official survey showed overall factory activity in contraction territory, underscoring the fragility of the wider economic recovery.
Japan’s Semiconductor Surge
Japan’s manufacturing sector gained notable momentum. New orders grew at their fastest pace since January 2018, driven by sustained demand for semiconductors and goods needed for AI development. The country’s S&P Global manufacturing PMI rose to 54.9 from 54.5 in July.
This was the highest reading since April and marked the industry’s eighth consecutive month of expansion. Annabel Fiddes of S&P Global Market Intelligence said the sector is well positioned to maintain strong performance, particularly given demand from industries linked to artificial intelligence.
South Korea’s Export Engine
South Korea’s industry expanded for the ninth consecutive month, though the pace moderated. The country’s PMI fell from 53.1 in July to 52.3 in August but stayed above the 50-point threshold. Rising export demand was the key driver.
In August, South Korea’s exports increased by 68.7% compared with the same month a year earlier, extending the growth streak to 15 months. The strong increase was largely attributed to AI-related products.
What to Watch
The coming months will test whether AI demand can continue offsetting cost pressures from the prolonged Middle East conflict.
