South Korean factory activity plunges into longest decline since early 2009

SEOUL – South Korea’s factory activity fell for the 11th straight month in May, the longest decline in 14 years, as a slowdown in the global economy hurt production and orders, putting pressure on the manufacturing sector. That’s what was revealed in Thursday’s investigation.

South Korea’s manufacturing sector’s seasonally adjusted Purchasing Managers Index (PMI), released by S&P Global, stood at 48.4 last month, slightly up from 48.1 in April.

Since July 2022, it has remained below 50, the dividing line between expansion and contraction, the longest such streak since early 2009.

“South Korea’s manufacturing environment continued to deteriorate in May as production, new orders and exports remain in contracting territory,” said Usama Bhatti, economist at S&P Global Market Intelligence.

“The two biggest components of headline numbers fell sharper in the latest period as companies continue to battle tough market conditions,” Bhatti said.

Production fell for the 13th straight month, and new orders fell for the 11th straight month, according to the sub-index. But the 15-month decline in new export orders was the slowest on record.

There have also been some improvements, from the economy and employment to inflation and future prospects.

Employment rose the most since March 2022, while input prices rose at their slowest pace since September 2020 and output prices fell for the first time since then.

The survey noted that companies cite both promotional measures and lower raw material prices as the reason for the drop in sales prices.

Supplier turnaround times have also fallen to their fastest since April 2016, with new positive signs at the forefront of the supply chain.

However, manufacturers’ optimism about future production recovered in May from a four-month low in April to the highest level since September 2022.

Separate data on Thursday showed that South Korea’s exports were weaker than expected in May but fell for the eighth straight month on an annual basis. Demand for semiconductors continues to slump.

Foreign sales fell 15.2% year-on-year to US$52.24 billion in May, compared with a 14.3% drop in April, according to Ministry of Trade data.

The streak was the longest year-over-year loss since January 2020.

Exports of semiconductors, South Korea’s biggest seller, fell 36.2%, marking the 10th consecutive month of deficits, but an improvement from April’s 41% decline.Reuters