Korea: Manufacturing PMI edges up in April despite declining Chinese demand
May 2, 2017
Korea’s manufacturing economy improved in April despite reports of subdued demand from China related to an ongoing diplomatic row over the deployment of a U.S. anti-missile system on Korean soil. The Nikkei manufacturing Purchasing Managers’ Index (PMI) reported by IHS Markit edged up from 48.4 in March to 49.4 in April, the best reading so far this year. Despite the improvement, April’s headline figure still suggests a deterioration in operating conditions among Korean manufacturers.
April’s report saw softer contractions in production and new orders. New export orders shrank at the fastest pace in half a year, weighed down by declining shipments to China. Against a backdrop of declining new business, companies continued to cut their staffing levels through April, although at a much slower pace than in March—which had marked an eight-year record. Lower new order volumes also allowed firms to work through existing business, while purchasing activity eased on the heels of reduced production. Regarding prices, cost-push inflation eased to a five-month low but was nonetheless markedly high, underpinned by higher raw material costs. Conversely, output prices barely rose as client pressure restricted companies’ ability to increase charges.
Author: David Ampudia, Economist