South Korea's manufacturing sector experienced its fastest growth in over two years in June, driven by a surge in new orders and robust global demand, according to a recent private-sector survey.
The Purchasing Managers Index (PMI) for South Korea, compiled by S&P Global, climbed to 52.0 in June, up from 51.6 in May, on a seasonally adjusted basis. This marks the highest reading since April 2022 and indicates expansion in the manufacturing sector for the second consecutive month.
Joe Hayes, principal economist at S&P Global Market Intelligence, commented, “The continued strength in data highlights the recovery in global industrial activity and trade. South Korean manufacturing, integral to global supply chains for key intermediate goods like batteries and semiconductors, often signals broader trends in exports.”
The survey revealed that new orders grew at the fastest pace since February 2022, fueled by increased demand both domestically and internationally. Notably, overseas orders saw their most significant rise in five months, with significant contributions from Asian markets including China, Vietnam, and Japan, as well as from North America and Europe.
South Korea's exports, which have been on an upward trajectory since October due to strong demand for computer chips and products from the United States, are nearing record-high levels. This positive trend was confirmed by the finance minister last week.
While output increased for the third consecutive month in June, the growth rate slowed compared to May. The survey also noted that stocks of finished goods were depleted at the fastest rate in nearly three years, and backlogs of work increased significantly, indicating that factories are operating near full capacity to meet rising demand.
However, the survey also highlighted challenges, such as accelerating inflation in input prices, which reached an eight-month high. Companies attributed this to unfavorable exchange rate movements and rising raw material costs, particularly for metals.
Despite strong sales forecasts, manufacturers' optimism for the year ahead declined to a six-month low, with concerns that domestic market conditions might constrain factory output.
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