South Korea Manufacturing Sector Slips Into Contraction - HSBC
March 31 2015 - 8:32PM
RTTF1
The manufacturing sector in South Korea slid into contraction in
March, the latest purchasing managers' index from HSBC showed on
Wednesday with a score of 49.2.
That's down sharply from 51.1 in February, and it drops below
the boom-or-bust line of 50 that separates expansion from
contraction.
The March reading also represents a four-month low score.
"The latest HSBC PMI data signaled a general worsening in
operating conditions in the South Korean manufacturing sector.
Production declined, having expanded in February at the fastest
pace since April 2013. This was underpinned by a fall in new
orders, with the rate of decline the fastest in over one-and-a-half
years," said Markit economist Amy Brownbill.
Production declined, alongside a fall in incoming new orders.
Subsequently employment growth slowed from February's 11-month high
to only a slight pace, while downward pressures on both input and
output prices were observed.
Manufacturing production declined in March for the first time
this year, having expanded in February at the fastest rate since
April 2013. Similarly, new orders at South Korean manufacturers
contracted in March, marking the end of a three-month period of
expansion.
Panelists linked the drop in total sales to poor market
conditions and to a fall in demand from both the domestic and
international markets. Subsequently, new exports orders decreased
for the first time since December 2014.
Despite lower production requirements and a fall in sales
volumes, manufacturers continued to hire additional staff in March.
However, employment growth eased from February's 11-month high to a
slower rate than the long-run series average.
In line with falls in output and new orders, buying activity at
South Korean manufacturers declined for the first time since
October 2014, although at only a slight rate. Subsequently, stocks
of purchases declined in March.
On the prices front, purchasing costs declined in March. The
rate of decrease was solid and the third-fastest since May 2013.
Meanwhile, charges decreased at the fastest rate in six years, with
firms mentioning increased price competition and price negotiations
with clients driving down selling prices.
"Employment growth slowed to only a slight rate. Meanwhile,
reports of falling raw material prices led to further declines in
purchasing prices, while charges decreased at the fastest rate in
six years," Brownbill said.