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Manufacturing sector remains in contraction in South Korea

Staff Writer | February 3, 2017
The South Korean manufacturing sector started 2017 in contraction, with operating conditions deteriorating for the sixth consecutive month.
Manufacturing South Korea
South Korea   Nikkei South Korea Manufacturing PMI
Driving this were quicker falls in both output and new orders.

Consequently, goods producers cut back on staff numbers, albeit at the weakest rate in the current five-month sequence of falling employment numbers.

On the price front, input prices rose at the sharpest rate in nearly six years, leading to an increase in prices charged.

On a more positive note, the newly-launched Future Output Index signalled the strongest confidence towards the 12-month outlook since June 2016.

The headline Nikkei South Korea Manufacturing Purchasing Managers’ Index (PMI)TM – a composite single-figure indicator of manufacturing performance – posted 49.0 in January, down from 49.4 in December, signalling a sharper deterioration in operating conditions at South Korean manufacturers.

January data pointed to a quicker decline in production at South Korean goods producers.

Although marginal, the rate of decrease was quicker than the average over 2016.

According to panellists, unstable economic conditions and a fall in new work inflows led to a reduction in output.

New orders contracted for the eighth consecutive month in January.

Firms mentioned a lack of consumer confidence as a factor behind the fall in incoming new orders.

However, the rate of decline was fractional overall and slower than the average over the aforementioned period.