Korea: Manufacturing sector declines for the fifth straight month in September
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) decreased to 48.0 in September from 49.0 in August, and thus remained below the 50-threshold that separates contraction from expansion in the manufacturing sector.
The deterioration in September was driven by decreasing new orders, output and employment. Moreover, new orders fell for the 11th consecutive month in September, despite a stabilization in volumes of new export orders—which likely suggests sluggish global growth is having a knock-on effect with the domestic economy. On the price front, despite rising input prices—mainly due to a weaker currency which raised import costs—output prices fell in September, as a result of firms’ efforts to stimulate demand. In addition, an expected slowdown in global trade flows amid elevated U.S.-China trade tensions continued to hamper business confidence in September.
Commenting on September’s result, Joe Hayes, IHS Markit economist, noted:
“Overall, latest survey data suggest that if spillover effects from the global growth slowdown are manifesting themselves in the domestic economy, the Bank of Korea may soon have to follow the current global trend of looser monetary policy.”