Gauges of manufacturing activity continued to signal resilience in most of Asia despite the Middle East conflict pressuring supply chains and raising cost pressures.

A lack of progress on reopening the Strait of Hormuz or reaching a deal to end the nearly six-month conflict between Iran and the U.S. has kept energy prices high and disrupted flows of raw materials.

But S&P Global purchasing manager indexes still indicate solid momentum in Asia's manufacturing economy midway through the third quarter, buoyed by healthy demand for artificial intelligence-related goods.

A standout was Japan. S&P Global's headline manufacturing PMI rose to 54.9 in August from 54.5 in July, staying firmly above the 50-line separating expansion from contraction to register the second-highest reading since January 2022.

Demand for semiconductors and AI products spurred the fastest rise in new business for Japan manufacturers in over eight years. Cost pressures remained intense, and factories have responded by raising prices sharply.

Costs continue to be driven by disruptions linked to the Middle East war and bottlenecks around the Strait of Hormuz, as well as a weak yen, said Annabel Fiddes at S&P Global Market Intelligence. But there are tentative signs that delivery delays have eased somewhat.

In China, new orders rose for the fifteenth consecutive month in August--the longest period of growth since 2018. Firms attributed that to improved market conditions, stronger client demand and export growth, the RatingDog PMI showed.

Surveys for Taiwan and South Korea showed a slight pullback but still-robust growth in activity, alongside firm export demand thanks to the AI boom. Business confidence among manufacturers in both economies picked up as firms cashed in on the AI and semiconductor "supercycle."

Companies in South Korea reported increased orders from major trading partners in August, driving export sales to rise at the fastest pace since November 2020. In Taiwan, a broad-based improvement in demand pushed growth in new export orders to among the strongest in over four-and-a-half years.

The picture was more mixed in South and Southeast Asia.

The seasonally adjusted HSBC India manufacturing PMI compiled by S&P touched a five-year low in August, extending its decline to a third month.

New business increased but at a slower pace, which Indian firms attributed to tough market conditions and subdued appetite for some products. Export sales rose further and cost pressures eased.

Thailand and Malaysia PMIs continued to signal an expansion in manufacturing activity, but Indonesia's gauge slipped into contraction.

Broadly speaking, the S&P surveys paint a relatively positive picture of demand and order trends in Asia's exporting powerhouses. But even where costs are easing, inflationary pressures remain historically high, and though businesses remain largely upbeat, they will keep a cautious eye on the Middle East.

--Fabiana Negrin Ochoa contributed to this report