In February, South Korean manufacturers expressed diminished confidence due to sluggish orders coupled with rising inflation. The manufacturing purchasing managers index (PMI) for South Korea dropped to 49.9 from 50.2 in January, falling below the critical 50-mark that differentiates between growth and contraction.
This figure indicates that manufacturing conditions have remained broadly unchanged in South Korea, although there was a slight improvement noted at the beginning of the year. Demand for manufactured goods within the domestic market has remained subdued, with only fractional growth observed in export orders.
While improved demand was reported from the Asia-Pacific region, this was largely offset by weaker sales to both Europe and the United States. Furthermore, manufacturers in South Korea continue to grapple with inflationary pressures impacting their input costs. For the month of February, there was a notable increase in input prices faced by South Korean manufacturers, driven by higher raw material costs and unfavorable fluctuations in exchange rates, which further exacerbated their cost burdens. In response to sluggish demand conditions, South Korean factory managers demonstrated caution by trimming payrolls during this period.
The confidence in the 12-month growth outlook has notably eased, landing below the series average, and as optimism diminished, firms resorted to reducing employment levels to the most significant extent since July. Looking ahead, the outlook for the months to come remains uncertain, with companies reporting a renewed decrease in outstanding business as of February.
This decline in orders and the ongoing issue of inflation cast a shadow over the prospects of recovery within the manufacturing sector. The South Korea Manufacturing PMI, derived from surveys distributed to 400 manufacturers from February 10 through February 20, highlights these concerning trends..