Korea: Manufacturing sector remains depressed in October
November 1, 2019
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) ticked up marginally from 48.0 in September to 48.4 in October, and thus remained below the 50-threshold that separates contraction from expansion in the manufacturing sector.
The softer deterioration in October was driven by a slower fall in output as external headwinds seemingly spilled over into the domestic economy. Trade tensions between the U.S. and China on the one hand, and Korean and Japan on the other, continued to weigh on export sales, while total new orders also fell in October. On the price front, manufacturers dropped their output prices in an attempt to boost sales, despite input prices contining to climb. On a brighter note, business confidence hit a 16-month high in October but remained relatively tepid by historical standards.
Commenting on October’s result, Joe Hayes, IHS Markit economist, noted:
“The slump in exports remains the true Achilles heel […] with headwinds coming from all directions. As well as US-Sino trade frictions, tensions with Japan and a stagnating European economy have significantly dented order book volumes at South Korean manufacturers.”
Author: Steven Burke, Economist