Korea: Despite rise in July, PMI stays in contraction territory
August 1, 2014
The manufacturing HSBC Purchasing Managers’ Index (PMI) rose from 48.4 in June to 49.3 in July, which represented the first increase in the index after three consecutive months of decrease. Despite July’s increase, the PMI index continued to hover below the 50-threshold that separates contraction from expansion in the manufacturing sector.
According to HSBC, “the PMI has been in negative territory four times this year, although the latest reading indicated only a marginal deterioration in performance compared to June.” July’s result showed that output and new business fell over the previous month, although at a slower pace. In addition, backlogs and finished goods fell sharply over the previous month, “due to a reduction in the number of new orders received.” HSBC concluded that, “Korea’s manufacturing sector remains weak and it suggests that downside risks to Korea’s economic outlook remain.”
Author: Ricardo Aceves, Senior Economist