South Korea’s manufacturing sector experienced its fastest growth in 26 months in June, driven by a surge in new orders amid improving global demand, according to a private-sector survey released on Monday.
The Purchasing Managers’ Index (PMI) for manufacturers, compiled by S&P Global, rose to 52.0 in June from 51.6 in May, on a seasonally adjusted basis. This marks the highest reading since April 2022, remaining above the 50-mark, which indicates expansion, for the second consecutive month.
“Another strong month of data provides further evidence that global industrial activity and trade are picking up,” said Joe Hayes, principal economist at S&P Global Market Intelligence. “Viewed as a bellwether for exports due to its integration in supply chains for key intermediate goods like batteries and semiconductors, South Korean manufacturing output and orders often provide leading signals for broader trends.”
New orders saw the fastest growth since February 2022, with strong demand both domestically and internationally. Overseas orders increased the most in five months, according to sub-indexes. Key markets contributing to sales growth included China, Vietnam, Japan, North America, and Europe.
South Korea’s exports have been rising since October, driven by demand for computer chips and strong sales to the United States, and are on track to reach record-high levels, according to the finance minister last week.
While output rose for the third consecutive month in June, it grew at a slower rate than in May. Stocks of finished goods decreased significantly, the most in nearly three years, and backlogs of work increased at the highest rate in almost two years, indicating that factory capacity was under pressure due to growing demand.
Input price inflation accelerated to the fastest rate in eight months, with companies citing unfavorable exchange rate movements and higher raw material prices, particularly for metals.
Despite positive sales forecasts, manufacturers’ optimism for the year ahead dropped to its lowest level in six months, as concerns about domestic market conditions potentially hindering factory output grew.
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