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Korea: PMI signals ongoing weakness in manufacturing sector in July

August 3, 2015

The manufacturing Purchasing Managers’ Index (PMI) rose from 46.1 in June to 47.6 in July, according to a release provided by Nikkei in collaboration with Markit. June’s result was the weakest since September 2012. Despite the increase in July, the index it still below the 50-threshold that separates contraction from expansion.

July’s result reflected ongoing declines in production and new orders, although the pace of decline in these categories was less pronounced than in the previous month. Production decreased due to unstable economic conditions, weak sales volumes and the MERS outbreak. New orders were down amid weak demand from both domestic and foreign clients. New orders from abroad contracted for the fifth straight month. Moreover, given the challenging environment, manufacturers cut employment levels the most since November of last year.

Overall, Nikkei analysts emphasized that, “latest survey data signalled worsening operating conditions in July. Although easing from June’s 33-month record, the rate of decline in output remained solid. This was underpinned by a further contraction in new orders.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 3.8% in 2015, which is down 0.2 percentage points from last month’s forecast. In 2016, the panel expects growth in fixed investment to increase 3.8%.


Author:, Economist

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Korea PMI July 2015

Note: Nikkei Korea Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Nikkei and Markit


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