South Korea July factory activity weakens for first time in two years

FILE PHOTO – Staff labour on a metal body at a development web site in central Seoul, South Korea, March 25, 2016. REUTERS/Kim Hong-Ji

SEOUL, Aug 1 (Reuters) – South Korea’s manufacturing unit exercise shrank in July for the primary time in practically two years, as output and new orders weakened amid continued inflation and provide chain woes, a private-sector survey confirmed on Monday.

The S&P International buying managers’ index (PMI) fell to a seasonally-adjusted 49.8 in July from 51.3 in June, falling beneath 50 for the primary time since September 2020. The 50-mark separates enlargement from contraction in manufacturing unit exercise from a earlier month.

Output fell for a fourth straight month and by the sharpest price since October 2021, as new orders decreased for the primary time in 22 months and people from abroad for the fifth month in a row.

“South Korean producers reported that sturdy inflationary pressures and sustained provide chain disruption had hindered manufacturing and demand at the beginning of the third quarter,” mentioned Usamah Bhatti, economist at S&P International Market Intelligence.

“Increased costs for inputs together with gas, metals and semiconductors meant that the disruption was broad-based throughout the manufacturing sector.”

There have been, nevertheless, indicators of value stress peaking out. The rising tempo of enter costs and output costs softened to the slowest in 4 months and 7 months, respectively.

Suppliers’ supply instances, which present the diploma of disruption, deteriorated, however by the least in 4 months.

Producers remained optimistic over the approaching yr for output, however the degree of optimism was the weakest since October final yr.

Reporting by Jihoon Lee; Enhancing by Sam Holmes

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