Asias factories stepped up production in March as a solid recovery in global demand helped manufacturers move past the setbacks of the pandemic, although rising costs are creating new challenges for businesses in the region.

A series of upbeat factory surveys released on Thursday reinforce market optimism that vaccine rollouts, as well as strong growth in global powerhouses like the United States and China, will help economies emerge from their sharp downturns of 2020.

Japan and South Korea saw factory activity expand in March thanks to solid demand at home and abroad, purchasing manager indexes PMI showed, offering relief to policymakers facing pressure to speed up a patchy recovery.

South Korean manufacturers continued to signal strong optimism as the rollout of COVID19 vaccinations began and demand for new products accelerated, said Usamah Bhatti, economist at IHS Markit.

Chinas factory activity in March expanded at the slowest pace in almost a year, though underlying economic conditions remained positive.

The CaixinMarkit Manufacturing PMI, which focuses on smaller firms, dropped to 50.6 in March from Februarys 50.9, missing market expectations.

The privatesector survey came after Wednesdays release of the official manufacturing PMI that showed Chinese factories cranking up production after a brief lull during the Lunar New Year holiday.

Activity in big, exportreliant economies stayed brisk.

The final au Jibun Bank Japan PMI rose to a seasonally adjusted 52.7…