Asia’s manufacturing sector lost momentum in July as sluggish global demand and continued uncertainty over U.S. trade policy weighed on business sentiment, according to private surveys released Friday. The data highlights mounting challenges for the region’s fragile economic recovery.

The slowdown came just ahead of recent U.S. trade deals with Japan and South Korea—developments analysts say could provide a modest boost to manufacturing activity and investor confidence in the coming months.

In export-heavy economies like Japan and South Korea, factory output remained under pressure. Purchasing Managers’ Index (PMI) readings showed continued contraction, reflecting the toll that President Donald Trump’s trade agenda has taken on Asia’s reliance on open global markets for growth.

China, the region’s largest economy, also reported a decline in manufacturing health. The S&P Global China General Manufacturing PMI dropped to 49.5 in July from 50.4 in June, missing analysts’ expectations and falling below the key 50 threshold that separates expansion from contraction.

The disappointing figure followed an official survey earlier in the week, which showed Chinese manufacturing shrinking for a fourth straight month. Economists noted that a short-lived surge in exports—driven by companies rushing to beat anticipated U.S. tariffs—appears to have faded, while domestic demand continues to struggle.

The latest data underscores persistent headwinds facing Asia’s manufacturers and suggests that a more sustained recovery may hinge on improved trade conditions and stronger global consumption.