Korea PMI January 2015


Korea: PMI falls back into contraction territory at beginning of 2016

February 1, 2016

The manufacturing Purchasing Managers’ Index (PMI) came in at 49.5 in January, according to a release provided by Nikkei in collaboration with Markit. The result was down from the 50.7 tallied in December, which had marked the highest reading in 10 months and a brief episode above the 50-threshold that separates contraction from expansion. In January, the PMI fell back below the 50-threshold, thus signaling worsening business conditions.

January’s setback mainly reflected decreases in production, total new orders and employment. However, buying activity was broadly stable in January and new exports orders expanded at a notably faster pace than in December. Regarding price developments, both input costs and output charges recorded a large drop in January. Overall, Markit analysts emphasized that, “the start of 2016 showed signs of worsening operating conditions in the South Korean manufacturing sector, as both production and new orders decreased, resuming the trends seen in November. Subsequently, manufacturers cut back on their staff numbers and at the sharpest rate since last July. The latest PMI data also signalled a sharp fall in input prices, with panellists mentioning reductions in oil- and metal-related materials. This suggests official producer prices will fall further in January.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 4.0% in 2016, which is down 0.1 percentage points from last month’s forecast. In 2017, the panel expects growth in fixed investment to increase 3.3%.

Author: Teresa Kersting, Economist

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Korea PMI Chart

Korea PMI January 2016

Note: Nikkei Korea Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Nikkei and Markit

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