Korea: Manufacturing PMI improves in December
January 3, 2022
The IHS Markit Manufacturing Purchasing Managers' Index (PMI) rose to 51.9 in December from November's 50.9. As such, the index moved further above the 50-threshold, signaling a faster improvement in business conditions compared to the previous month.
Taking a closer look at the details, the print benefited from new orders, which grew at the fastest pace in three months despite weaker momentum compared to H1 2021. The loss of momentum was reportedly due to poor shipping container availability and reduced demand from Japan, which led to the first monthly fall in new export orders since September 2020. Meanwhile, output volumes decreased, hit by tough supply challenges and the longest delivery times since April 2020. More positively, some output constraints were also labor-related, which led firms to raise headcounts following two months of job shedding. Lastly, despite lower input inflation than the all-time high registered in November, output prices still grew sharply.
Commenting on the outlook, Joe Hayes, senior economist at IHS Markit, said:
“Given South Korea's prominence in the automotive and electronics industries, substantial improvements in global supply chains will be required before we see a meaningful acceleration in manufacturing growth.”
Author: Frederico Teixeira de Abreu, Junior Economist