Asia factory activity expands in May

Asia's factory activity continued to expand in May thanks to an ongoing recovery in global demand, surveys showed on Tuesday, though rising raw material costs and supply chain constraints clouded the outlook.

A spike in COVID-19 infections in some countries could disrupt supply chains, posing a headache for manufacturers and weighing on Asia's export-driven recovery, analysts say.

Japan and South Korea saw expansions in factory activity moderate in May, purchasing managers' indexes (PMI) showed on Tuesday, underscoring the fragile nature of their recoveries.

"A spread of new variants is already having a negative impact on supply chains. If this situation persists, it would hit Asian manufacturers that had been scrambling to diversify supply chains out of China," said Toru Nishihama, chief economist at Dai-ichi Life Research Institute.