South Korea’s manufacturing sector continues to face challenges as the Purchasing Managers’ Index (PMI) for May contracted for the 11th straight month, according to S&P Global. The seasonally adjusted PMI recorded a slight increase from April’s 48.1 to 48.4. The ongoing global economic slowdown has led to reduced production and orders, putting significant pressure on manufacturers in South Korea.
A PMI below 50 indicates a contraction in the manufacturing sector. South Korea’s manufacturing PMI has now remained below this threshold for the 11th consecutive month, marking the longest contraction period since early 2009.
The survey results reveal a persistent decline in output for the 13th straight month, while new orders experienced an 11th consecutive month of decline. However, the rate of decline in new export orders slowed, marking the 15th straight month of contraction but at a reduced pace.
On a positive note, South Korea saw its largest increase in employment since March 2022. Additionally, raw material prices rose at the slowest rate since September 2020, and the price of produce fell for the first time since then. Manufacturers attribute these developments to their efforts to boost sales and negotiate lower raw material prices, leading to reduced selling prices.
Moreover, suppliers’ delivery time improved significantly, reaching its fastest pace since April 2016. This improvement in the supply chain is another encouraging sign.
In terms of future outlook, manufacturers expressed increased optimism regarding future output in May. This positive sentiment follows a four-month low in April, indicating a potential rebound in the coming months.