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.”
Author: Carl Kelly, Economist