Korea PMI September 2016


Korea: Conditions in manufacturing sector deteriorate sharply in September

September 30, 2016

Activity in Korea’s manufacturing sector deteriorated significantly in Q3. The Nikkei Purchasing Managers’ Index (PMI) reported by IHS Markit fell again in September. The indicator declined from 48.6 to 47.6, marking a 14-month low. The result points to a faster contraction in operating conditions since the indicator moved further below the 50-threshold that separates expansion from contraction in the sector.

According to IHS Markit, the decline reflected the fastest contraction in manufacturing production in more than a year as weak external demand prompted a decrease in new orders. Due to the drop in production, Korean goods producers decided to cut staff levels for the first time in six months. Analysts at IHS Markit added that, “an unstable economy and labor union strikes at some automobile companies led to a decline in new work intakes. Also contributing to the overall contraction in total new orders, was the fastest decrease in international demand in over three years.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 2.6% in 2016, which is down 0.2 percentage points from last month’s forecast. In 2017, the panel expects growth in fixed investment to increase 2.8%.

Author:, Senior Economist

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Korea PMI Chart

Korea PMI September 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 IHS Markit

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