A factory is seen in Incheon, South Korea. REUTERS/Kim Hong-Ji/File photo
SEOUL – South Korea’s factory activity shrank for an 11th consecutive month in May, slumping into its longest downtrend in 14 years, a survey showed on Thursday, as a slowing global economy hit output and orders and ratcheted up pressure on manufacturers.
The S&P Global’s seasonally adjusted purchasing managers’ index (PMI) for South Korean manufacturers stood at 48.4 last month, slightly up from 48.1 in April.
It has remained below the 50-mark that separates expansion from contraction since July 2022, the longest such streak since early 2009.
“The deterioration in South Korean manufacturing conditions was sustained during May as production, new orders and exports remained in contraction territory,” said economist Usamah Bhatti at S&P Global Market Intelligence.
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“The two largest components of the headline reading fell at a sharper rate in the latest survey period as firms continued to battle challenging market conditions,” Bhatti said.
Sub-indexes showed output shrank for the 13th month and new orders fell for an 11th month. The fall in new export orders for the 15th month, however, was the softest in the streak.
There were a few improvements too, in business conditions and from employment to inflation and future outlook.
Employment increased by the most since March 2022, while input prices rose at their slowest pace since September 2020, with output price falling for the first time since then.
South Korea’s on-year job additions bounced back sharply in March
The survey noted that firms cited both an effort to stimulate sales as well as lower raw material prices for the fall in selling prices.
Suppliers’ delivery times also shortened by the greatest since April 2016, another positive sign on the supply chain front.
Manufacturers’ optimism for future output rebounded in May from a four-month low in April, hitting the highest level since September 2022.