SEOUL (Reuters) – South Korea’s factory activity contracted at the fastest pace in six months in March, a survey showed on Monday, as output and new orders fell at quicker rates and suggested weaker global demand will drag on the domestic economic recovery.
The S&P Global’s seasonally adjusted purchasing managers’ index (PMI) for South Korean manufacturers declined to 47.6 in March from 48.5 in February.
It was the lowest reading since September 2022 and the ninth consecutive month below 50, line separating expansion and contraction.
Sub-indexes showed output shrank by the most in five months, while new orders fell by the most in three.
The contraction in export orders also steepened from the previous month, highlighting slack global demand as the world economy struggles in the wake of a months-long policy tightening campaign by major central banks and the fallout from the Ukraine war.
Overall, the survey results suggest Asia’s fourth-largest economy faces a longer road to a post-COVID recovery.
“March PMI data signalled that South Korea’s manufacturing sector remained mired in contraction territory,” said economist Usamah Bhatti at S&P Global Market Intelligence.
“Latest survey data provides signs that the sector still has a way to go to overcome the current downturn.”
The survey also showed input price inflation accelerated for the first time in five months, with firms citing higher raw material prices and weaker exchange rates. Output price inflation also quickened.
On a positive note, March marked the shortest delay in suppliers’ delivery times since November 2019. The survey noted that raw material shortages remained a burden, but softer demand had helped to unclog some of the supply chain snags.
Moreover, an improvement in business sentiment pushed the overall degree of optimism to an eight-month high.
(Reporting by Jihoon Lee; Editing by Shri Navaratnam)
