In July, South Korea's manufacturing sector experienced a slight contraction, according to the latest report by S&P Global released on Thursday. The seasonally adjusted South Korea manufacturing purchasing managers index (PMI) fell to 51.4 in July, a decrease from 52.0 in June. However, it remains above the critical threshold of 50 that indicates growth as opposed to contraction.
This data highlights the resilience of the sector despite facing certain pressures, as indicated by the comprehensive monthly survey conducted by S&P Global. Notably, the growth in exports has been sustained for the seventh consecutive month, with the rate of expansion aligning closely with that observed in June.
The report emphasizes that new export orders experienced significant growth, largely driven by increased demand from key regions including South East Asia, the United States, and Japan. Conversely, the report pointed out that domestic demand in South Korea remained “muted” during July. Factory managers noted that while they were expanding payrolls to meet the existing demand, the challenges of local consumption persist in contributing to a less vigorous market environment. Additionally, manufacturing managers reported an increase in delivery delays in July, attributed to logistical bottlenecks and disruptions primarily affecting the Red Sea and Mainland China.
The report indicates that these delays were the most significant since January 2023, highlighting the complexities faced by manufacturers in obtaining necessary inputs for production. Despite these challenges, South Korean factory managers maintained an optimistic outlook in July. This optimism is rooted in the expectation that the current demand uplift will continue to be sustained, alongside a possibility of accelerating growth driven by further new product launches. The South Korea Manufacturing PMI is compiled by S&P Global from a survey of 400 manufacturers, conducted between July 11 and July 23.
The data reflects the ongoing dynamics in the manufacturing landscape, illustrating a blend of growth potential and existing challenges in the sector..