Korea: Operating conditions in the manufacturing sector deteriorate in March
The manufacturing sector signaled the first deterioration in operating conditions in three months in March. The Nikkei manufacturing Purchasing Managers’ Index (PMI), reported by IHS Markit, ticked down to 49.1 in March from 50.3 in February. The index therefore came in below the 50-point threshold that can be gauged as separating a contraction from an expansion in the manufacturing sector.
In March, output in the manufacturing sector fell for the first time since December. The decrease came as new business inflows fell for the first time in ten months. New business from abroad in particular fell sharply in March and manufacturers noted weaker demand from customers in China, India, Japan and the United States. The letup in incoming business reduced capacity pressures on manufacturers and helped them to reduce backlogs of work; the delivery times of suppliers also improved. With less pressure on production lines in March, employment levels in the manufacturing sector were little changed compared to February.
In terms of price developments, input prices increased in March and, according to some of the manufacturers surveyed, this was due to higher prices for raw materials such as metals and oil. Meanwhile, as input prices rose, businesses raised their output prices slightly to protect their profit margins.