Korea: Business conditions continue to improve in October
November 1, 2018
The manufacturing Purchasing Managers’ Index (PMI), produced by Nikkei and reported by IHS Markit, ticked down from 51.3 in September to 51.0 in October. However, the PMI remained above the crucial 50-point threshold separating expansion from contraction in the manufacturing sector.
The index reading in October reflected robust growth in output and employment. In terms of new orders, domestic orders rose but those destined for export dropped amid weaker demand from key trading partners abroad. Manufacturers’ input stocks accumulated for the first time since May in October, while the delivery times they faced from suppliers lengthened. Meanwhile, despite higher staffing costs and a depreciation of the won, input prices for manufacturers rose at the softest pace in 15 months in October. Regarding output prices, strong competitive pressures led manufacturers to engage in price discounting for the first time in over a year in October.
Commenting on the outlook for exports, a key weak spot in October’s PMI reading, Joe Hayes, economist at IHS Markit, said:
“[…] against the backdrop of rising trade tensions, survey data indicated that the downturn in export markets continued in October. Forecasts of challenging economic conditions globally and domestically [both suppressed] the business outlook, with confidence remaining at a historically weak level.”
Author: Edward Gardner, Economist