Korea PMI January 2016


Korea: Manufacturing PMI falls marginally in January

February 2, 2017

The Nikkei Purchasing Managers’ Index (PMI) reported by IHS Markit was 49.0 in January, slightly below December’s 49.4. The indicator remains below the 50-point threshold, highlighting a contraction in manufacturers’ business activity.

According to IHS Markit, the manufacturing sector started off 2017 in contractionary territory, with operating conditions deteriorating for a sixth consecutive month in January. The result at the outset of the year stemmed from a faster decline in manufacturing production and new orders. Consequently, Korean businesses reduced their employment levels just as they faced the sharpest increase in input prices in nearly six years. The strong increase in prices stemmed from an unfavorable exchange rate.

The silver lining of the January report is firms’ more optimistic outlook. According to Markit, “nearly one-quarter of the survey panel anticipate higher output over the coming year, compared to less than 14% that expect a decline. Forecasts of improved marketing activities, new product launches and greater international demand were all cited as factors behind the confidence.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 3.5% in 2017, which is unchanged from last month’s forecast. In 2018, the panel expects growth in fixed investment to grow 2.5%.

Author: Ricard Torné, Lead Economist

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Korea PMI Chart

Korea PMI January 2016 0

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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