Korea: Manufacturing PMI hits highest reading since June 2021 in February
The IHS Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 53.8 in February from January’s 52.8. February’s result marked the strongest reading since June 2021. As such, the index moved further above the 50.0 no-change threshold, signaling a faster improvement in business conditions compared to the previous month.
February’s higher print was driven by stronger growth in output and new orders, which grew at the fastest rates since July and June, respectively. This comes despite a recent surge in Covid-19 cases in Korea. A reopening of significant export destinations, such as the EU and US, following Omicron waves in those countries helped to support sales abroad. The robust improvement in business conditions led to a renewed increase in employment levels, while stocks of purchases continued to increase. That said, input inflation accelerated, contributing to the highest level of output inflation since April 2004. This suggests that supply bottlenecks may continue to be hindering production.
Commenting on firms’ outlook, Usamah Bhatti, economist at IHS Markit, said:
“South Korean manufacturers were positive that the risks posed by ongoing shortages and disruptions would ease and allow for a broad recovery in demand. As such, the degree of business optimism strengthened in February to the highest for a year. This is broadly in line with current IHS Markit estimates for industrial production to grow 2.2% in 2022.”