Korea: Business conditions improve for the first time in seven months in September
October 1, 2018
Business conditions improved in Korea’s manufacturing sector for the first time in seven months in September, with the headline manufacturing Purchasing Managers’ Index (PMI) rising to 51.3 from 49.9 in August. The index, produced by Nikkei and reported by IHS Markit, moved above the 50-point threshold that separates expansion from contraction in the manufacturing sector.
The uptick in the headline figure came on the back of improvements in output, order book volumes and employment gains. Output increased at the quickest pace in 10 months due to strong domestic new order growth, which outweighed fewer orders for export. Input purchasing activity picked up to keep pace with the increased demand. In addition, firms increased their payrolls at the sharpest rate since May 2013.
Input inflationary pressures increased in September due to unfavorable exchange rate movements and higher raw material costs. As a result, output price inflation picked up as firms’ margins were squeezed by intensified cost pressures. Looking ahead, businesses’ expectations for future output rose in September, although the overall level of optimism remained weak as companies expect softening domestic and global economic growth.
Korea Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists expect fixed investment to expand 2% in 2018, which is down 0.3 percentage points from last month’s forecast. In 2019, the panel expects fixed investment to grow 2.4%, down 0.1 percentage points from last month’s estimate.
Author: Edward Gardner, Economist